Bullion Gradually Trending Lower On Fed Nerves & War Premium Unwind

Gold prices continued their downtrend during the APAC session today as jitters re further Fed tightening grew and the situation in the Middle East looks contained to Israel/Gaza. Thus the war premium driven by flight-to-quality flows is unwinding. Bullion is down only 0.2% today after falling 1% on Friday, ahead of Tuesday’s US CPI but is down 2.5% this month. It is trading around $1936.30/oz, off the intraday low. The USD index is slightly higher and so is the 10-year yield.

• Gold is now down 3.7% from its post-Hamas attack high of $2009.41. It cleared support at $1938.10, 50-day EMA, on Friday which has opened up $1868.80, October 13 low.
• Later the Fed’s Cook gives some introductory remarks. There is little on the data front with only NY Fed inflation expectations and the US monthly budget data. The ECB’s de Guindos speaks and updated European Commission forecasts are due. The focus of the week is likely to be US CPI on Tuesday, which should be important for the Fed outlook. Gold is likely to fall if it prints higher than expected.