Gold under pressure of hawkish central banks

2023-11-10
Summary:

Gold flat, set for the worst week in a month due to a strong dollar, Treasury yields post-Fed Chair Powell's hawkish comments.

Gold prices were flat on Friday and on track for their worst week in more than a month, weighed down by a stronger US dollar and Treasury yields after hawkish remarks from Fed Chair Powell.

Fed officials have adopted a more hawkish outlook and stressed that further rate hikes remained on the table if inflation doesn’t continue to return to the 2% target.


The dollar index was heading for its best week in two months. The number of Americans filing new claims for unemployment benefits went down last week.


Other central banks joined the cohort to suggest that markets might grow too optimistic about inflation fight. It is now predicted that interest rates are peaking after the Fed turned more dovish at its meeting last week.


The RBA on Friday warned there were risks of further upside surprises to inflation following its latest hike in interest rates, while also raising forecasts for economic growth and employment.


BOE Chief Economist Huw Pill said on Thursday that it was essential interest rates stay at their current level in order to tame inflation, in a shift in tone from earlier in the week when he discussed possible cuts next year.

XAUUSD

Gold may continue to struggle as investors have seen false dawns of inflation relief. The double top pattern adds to bearish signals and a rally above the 1965 level is needed to negate the downtrend.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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