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Stronger But Remains In A Bear Cycle

GOLD

Gold has experienced a slight weakening (-0.1%) during the Asia-Pacific session, following a 0.7% advance on Monday. The previous increase in gold prices occurred as tsy yields and the value of the dollar declined in response to disappointing US service-sector data. This data prompted traders to reassess their expectations regarding the Federal Reserve's path for interest rate hikes

  • The May ISM Services report revealed the lowest level since December 2022, and the Prices Paid index dropped to its lowest point since May 2020. Additionally, the Employment component fell below 50 (49.2), marking the first time since December.
  • FOMC dated OIS price ~6bp hike into next week's meeting with a terminal rate of ~5.25% in July. There are ~25bps of cuts priced for 2023.
  • According to MNI’s technical team, the bear cycle in gold remains intact and recent short-term gains appear to have been corrective. A break of trendline support, drawn from November 3, at 1946.90 would reinforce bearish conditions and open $1903.50, a Fibonacci retracement.
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