A Little Higher In Asia; One-Month Low Remains Level To Watch

Gold is ~$4/oz firmer at writing to print $1,902/oz, extending a move away from 1-month lows made on Monday (at $1,891.7/oz) as nominal U.S. Tsy yields and the USD (DXY) have ticked lower in Asia-Pac dealing, with the former broadly continuing to back away from recent cycle highs.

• To recap, the precious metal closed ~$34/oz lower on Monday, with the move lower facilitated by a broad uptick in U.S. real yields and the USD (DXY).
• Heightened worry in recent sessions re: Fed tightening in the upcoming May 4 FOMC is evident, with gold extending a pullback from near the $2,000/oz mark despite a notable rise in geopolitical risks re: stagflation, as well as events (and consequences) surrounding China’s ongoing COVID outbreak and the Russia-Ukraine conflict.
• May FOMC-dated OIS continue to price in a shade over 50bp of tightening, possibly locking in expectations for a 50 bp hike for that meeting, with the pre-FOMC media blackout having kicked in.
• From a technical perspective, the pullback from recent highs at $1,998.4/oz (Apr 18 high) continues to represent a bearish threat. Gold has held key support at $1,890.2/oz (Mar 29 low and bear trigger) for now, although a break below that would open up further support at $1,878.4/oz (Feb 24 low).