Little Changed In Asia; Some Reprieve As Dollar Rally Pauses

Gold deals ~$2/oz softer to print ~$1,746/oz in fairly limited Asia-Pac dealing, holding on to the bulk of Tuesday’s gains at writing.

• To recap, gold closed ~$12 firmer on Tuesday amidst a downtick in the USD (DXY) and U.S. real yields, snapping a six-day streak of lower daily closes as participants reacted to weak U.S. economic data prints (flash PMIs, new home sales, and the Richmond Fed m’fing index).
• Sep FOMC dated OIS currently price in ~63bp of tightening at that meeting (pointing to approx. even odds of a 50bp vs a 75bp hike at the meeting), a little below levels observed prior to Tuesday’s U.S. data prints.
• Comments from Minneapolis Fed Pres Kashkari (‘23 voter) provided little fresh insight against recent Fedspeak, emphasising the need to fight inflation, stating that the Fed would only relax rate hikes should “compelling evidence” point to inflation “well on its way back down to 2%”.
• From a technical perspective, conditions for gold remain bearish following its recent failure to break its trendline resistance. Initial support is seen at $1,727.8/oz (Aug 22 low), while initial resistance stands at ~$1,764.9/oz (20-Day EMA).