Fed and The Dollar Drive Short-Term Pullback on Gold

In the absence of a major bullish catalyst, with interest rate expectations on the rise and stock market indices at or near record highs globally, gold has been consolidating since the intermediate high posted in early September. That high, set just after speeches by the Fed’s Mester, Dudley and George and immediately prior to the beginning of the central bank’s blackout period on September 9th, incidentally coincided with lows on the US dollar and 10-year Treasury yields. Since then, fixed income markets moved from pricing a 69% probability of no change and 31% chance of another hike by the end of the year to almost fully pricing in a 25-basis point move in December (i.e. 96.7% probability of a target rate of 1.25%-1.50% in December). Source: CME True to its strong negative correlation with government bond yields and the currency (especially with USDJPY) at the moment, the rise in rates and ensuing dollar strength put pressure on gold prices. These corr...

from GoldBroker.com https://www.goldbroker.com/news/fed-dollar-drive-short-term-pullback-gold-1224