Recovers Some Ground

Gold has recovered some ground following the 2.8% drop to start the week. We are back at $1826, around 0.35% higher than NY close under $1820.

• The weaker USD trend has likely aided gold's rebound today. The DXY has edged back below 105.00 as the session has progressed.
• Regional equities have also been downbeat, likely aiding demand from a safe haven standpoint. However, US equity futures have firmed, back above 1% for both the S&P and Nasdaq at the time of writing, following strong sell-offs in recent sessions.
• US yields remain firm, particularly at the front end, although the 2/10s curve has inverted, which can also be construed as a negative risk signal and therefore supportive of gold.
• US real yields have surged back to 2019 highs though, with a number of banks now expecting a 75bps hike from the Fed this week.
• Arguably we should struggle to get ahead of the 200 MA, which comes in at $1843.3, ahead of the FOMC this week. The mid-May low of just below $1800 may come into play on further USD strength.