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Little Changed In Asia

GOLD

Gold sits $2/oz firmer, printing $1,822/oz at typing. The precious metal operates within a tight ~$5/oz range after briefly showing below Tuesday’s worst levels earlier in the session, with a limited downtick in the USD (DXY) providing some support for the space.

  • To recap, bullion closed $2/oz lower on Tuesday amidst an uptick in U.S. real yields and the DXY. Gold has established a fairly limited $60 range in June, tracking meandering in U.S. real yields and the DXY, with focus coalescing around Fed hawkishness and expectations from some quarters re: the potential for a Fed-led economic slowdown.
  • July FOMC dated OIS now price in ~66bp of rate hikes for that meeting, down from Tuesday’s intraday high (~73bp), while a cumulative ~181bp of tightening is now priced in for calendar ‘22.
  • Up next, Fedspeak from Fed Chair Powell, (1400 BST), Cleveland Fed Pres Mester (1630 BST, ‘22 voter) and St. Louis Fed Pres Bullard (1805 BST, ‘22 voter) is due, with the latter noted to have written an essay on Tuesday re: the merits of keeping the Fed policy rate ahead of the inflation rate.
  • From a technical perspective, gold has continued to move lower over the past two weeks, approaching initial support at $1,805.2/oz (Jun 14 low), a break of which would expose further support at $1,787.0/oz (May 16 low and bear trigger).

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