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Sent Lower By King Dollar; Demand For Physical Gold Remains Elevated

GOLD

Gold deals ~$4/oz lower at typing to print ~$1,882/oz, operating around session lows at typing.

  • To recap Wednesday’s price action, the precious metal closed ~$20/oz lower, coming under pressure from the USD (DXY) hitting five-year highs during the session, with a broad uptick in U.S. real yields observed as well.
  • May FOMC dated OIS now price in ~50bp of tightening for that meeting, although hikes implied for the June meeting has spiked to >75bp at writing (cumulative ~129bp priced for both months), facilitated by a ~25bp move in early Asia-Pac dealing. A note that this move comes as the cumulative pricing for calendar ‘22 continues to move lower throughout the week (~230bp at typing).
  • Elsewhere, the World Gold Council (WGC) released their quarterly trends report on Wednesday, highlighting that demand for physical gold had increased by 34% Q/Q for Q1, led by inflows into gold-related ETFs. This comes as known ETF holdings of gold have backed away slightly from one-year highs witnessed late last week, however remaining ~4% adrift of COVID-induced all-time highs seen in ‘20.
  • From a technical perspective, gold remains vulnerable after breaking below the bear trigger at $1,890.2/oz (Mar 29 low), opening the way for a further descent to $1,878.4/oz (Feb 24 low).
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