- Gold meets fresh supply and approaches the all-time low set on Friday again.
- The resurgence in the demand for dollars turns out to be a key factor exerting downward pressure.
- Risk aversion momentum helps limit losses ahead of key central bank meetings this week.
The Prayed it maintained its offered tone during the early hours of the American session and is currently hovering near the $1,665 area, just above the daily low. The strengthening US dollar weighs on the dollar-denominated commodity, which remains within striking distance of its lowest level since April 2020, touched on Friday.
Expectations that the Fed will continue its aggressive path of rate hikes to rein in uncomfortably high inflation continue to support the USD. Falling short-term inflation expectations for US consumer prices to a one-year low in September forced investors to cut bets on a 100 basis point Fed rate hike. However, the US central bank is expected to offer at least 75 basis points at the end of a two-day monetary policy meeting on Wednesday, which continues to support the USD.
This, in turn, continues to support elevated US Treasury yields. This, along with the prospect of faster interest rate hikes by other major central banks, is helping to drive away flows of the unyielding yellow metal. That said, the prevailing risk appetite environment, represented by a further leg down in equity markets, offers some support to traditional haven assets. This turns out to be the only factor that lends some support to gold and limits the decline, at least for now.
Investors also seem reluctant to make aggressive bets, preferring to stay on the sidelines in the face of a spate of central bank meetings this week. On Wednesday the Fed is scheduled to announce its decision, which will play a key role in influencing short-term dollar price dynamics. Following on Thursday are the Bank of Japan, the Swiss National Bank and the Bank of England. This, in turn, should help investors determine the next leg of a directional move for gold.
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
