Gold prices fell yellow as US Treasury bond yields rose on Thursday after the Fed’s December meeting minutes signaled faster rate hikes to defuse broadening inflationary risks. Spot gold fell 0.85% to $1,794.5 at press time, while US gold futures fell 1.65% to $1,794.8
“A strong workforce data means gold will fall further. coming”
SPI Asset Management managing partner Stephen Innes comments, “What the market should be concerned with with the end goal is how much surprise the Fed will surprise in the future” and states how the developments will affect gold:
If another rate hike comes as a surprise, it would be really negative for gold.
Fed officials said the ‘too tight’ US labor market could guarantee to raise interest rates sooner than expected and also cut the bank’s total assets to control inflation.
Some investors see gold as a hedge against hyperinflation, but the precious metal is highly sensitive to rising US interest rates, which increases the opportunity cost of holding non-yielding bullion. Benchmark US 10-year Treasury yields rose to their strongest level since April 2021, increasing the opportunity cost of holding gold.
The ADP National Employment report showed private US payrolls more than doubled last month’s estimates of sdollarserin polled by Reuters, raising expectations for nonfarm payrolls to be released on Friday. Evaluating the effects of this situation, Stephen Innes makes the following prediction:
If we have a strong workforce data, gold will definitely fall even further.
David Meger: Rising bond yields are putting pressure on gold
According to Reuters technical analyst Wang Tao, spot gold dropped to $1,801 after failing to break the resistance at $1,830. can test support. Kunal Shah, head of research at Nirmal Bang Commodities, comments, “With the emergence of the new virus, growth will likely pick up well after the second quarter of 2022.” David Meger, director of metal trading at High Ridge Futures, comments:
The gold market has seen a pullback from recent highs in response to Fed minutes. The market was already under pressure in anticipation of a more hawkish Fed. The increase in bond yields is clearly putting pressure on the gold market. However, the underlying support in this market premise, continued inflationary pressures, and virus concerns add some safe-haven demand element.
Kriptokoin.com , according to the minutes of the Fed’s December 14-15 policy meeting, Fed officials said last month that the U.S. labor market was “very It’s tight,” he said, which may require not only raising interest rates sooner than expected, but also rapidly reducing asset stocks. Fed funds futures were priced at 80% chance of a rate hike in March following the release of Fed minutes.
After the Fed minutes, the benchmark 10-year US Treasury rates climbed to the highest level since April 2021, while the dollar (DXY) outstripped losses. Meanwhile, Goldman Sachs states in a note that as digital assets become more widely adopted, the cryptocurrency Bitcoin will take market share from gold in 2022.
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