Back From Fresh Two-Week Highs In Asia

Gold sits ~$1/oz firmer to print $1,735/oz at typing, back from two-week highs made earlier in the session ($1,741.8/oz). The precious metal has held on to the bulk of its post-FOMC gains amidst a downtick in the USD, with the DXY operating around session lows at typing after briefly showing through its post-FOMC trough.

• To recap, gold closed ~$17/oz higher on Wednesday mainly on the back of a ~$20 post-FOMC rally as participants in some quarters have interpreted comments from Fed Chair Powell’s presser as raising the possibility of less-aggressive tightening in the coming meetings (mainly over the emphasis on the Fed offering “less clear” guidance on rate hikes, as well as the flagging of data dependence for September’s decision).
• Sep FOMC dated OIS now price in ~54bp of tightening for that meeting, pointing to the removal of ~8bp of tightening premium in the wake of Wednesday’s FOMC decision.
• From a technical perspective, gold’s rally on Wednesday failed to breach initial resistance at $1,745.4/oz (Jul 13 high), keeping in mind that short-term gains still appear to be corrective, following its bounce off $1,681.0/oz last Thursday. On the other hand, initial support is seen at $1,697.7/oz (Jul 14 low).