- The price of gold falls for the second day in a row, pressured by a combination of factors.
- Expectations of an aggressive Fed rate hike continue to act as a headwind amid signs of stability in the markets.
- Modest dollar strength further weighs on XAU/USD, although recession fears help limit losses.
The price of Gold falls for the second day in a row on Tuesday and approaches the $1,800 level again during the European session.
The incessant rumors about the Federal Reserve and about the rate hike to curb rising inflation it turned out to be a key factor that continued to act as a headwind for non-performing gold. Indeed, Fed Chairman Jerome Powell said last week that the US central bank remains focused on controlling inflation and added that the US economy is well positioned to handle tighter monetary policy. Aside from this, signs of stability in the financial markets further weighed on the safe-haven XAU/USD.
News that US President Joe Biden was leaning toward a decision on the relaxation of tariffs on products from China offered a brief respite to investors. However, growing concerns about a global recession should dampen any bullish moves. Meanwhile, the monetary flow of risk appetite pushed US Treasury yields higher. This, together with the expectations of the Fed, caused the dollar returned to close to its two-decade highs and put additional downward pressure on golddenominated in dollars.
Despite the combination of negative factors, the bears seem reluctant to open aggressive positions and might prefer to wait for this week’s key releases. will be published on Wednesday the minutes of the last FOMC monetary policy meeting, where new clues will be sought on the path of monetary policy tightening. Market participants will also note Friday’s release of the monthly employment report nfp in the US This will play a key role in influencing the short-term dollar price dynamics and help investors determine the next directional move for the price of gold.
Technical levels to watch
Source: Fx Street
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