Spot gold is seeing some slight reprieve before the weekend as King Dollar moderates after Fed Chair Powell once again resisted against the idea of a 75 basis point hike.
Given the palpable concerns surrounding the Fed’s ultra-hawkish stance, bullion prices have been dragged below its 200-day simple moving average as investors prefer the US dollar over the precious metal as a store of value. Investors are shedding their exposure to gold, with bullion-backed ETFs reducing their holdings of the precious metal for a sixth consecutive day.
Gold’s hunt for a lower equilibrium remains ongoing as long as the Fed has yet to reach peak hawkishness and US Treasury yields can prolong their ascent, noting that the precious metal offers no yields. Concrete signs that US inflation has peaked and will continue decelerating should help gold lay a foundation from which bullion can meaningfully pare losses.
Spot gold may soon settle back within its 2H21 range around the psychologically-important $1800 level, with bullion bulls hoping for support from the darkening global economic outlook.