Gold Prices Down On Hawkish Fed Comments

Gold prices are down during the session by 0.8% to around $1793.50/oz unwinding just over half of the post-US CPI gain. Even though DXY is only up slightly, gold markets have been rattled by Fed Chairman Powell’s comment that rates are not yet close to their terminal rate.

• The Fed’s rate expectations were revised up to end 2023 at 5.1% before being eased to 4.1% in 2024. A longer and higher rate trajectory is likely to weigh on bullion as it is non-yielding and thus other assets become more attractive to investors. But there tends to be safe haven buying of gold during recessions. As a result, ANZ has revised up its end-2023 forecast to US$1900/oz.
• Despite the correction seen today trend conditions for gold remain bullish. Resistance is at Tuesday’s high of $1824.50.
• In the US, retail sales data print for November and are expected to moderate from the October gains. There are also jobless claims and the Philly and NY Fed surveys. A number of European central banks meet with the focus on the ECB and BoE.