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‘Death cross’ sank gold below $1800 this week

The ‘death cross’ formed at the onset of this week proved to be the technical catalyst that sank spot gold well below $1800, with the end-September lows perhaps soon being called upon to offer stronger support for ailing bullion prices.

Rising expectations for more incoming supersized Fed rate hikes have eroded support for the precious metal long deemed a safe haven, dragging the zero-yielding asset closer to $1700.

‘Death cross’ sank gold below $1800

Gold bulls are stuck in the sinking sands created by the rising US dollar, in light of the Fed’s aggressive stance to defend its inflation-fighting credibility as conveyed by the latest FOMC minutes and more hawkish Fed speak this week.

Noting that markets have yet to fully price in a 75bps hike at the upcoming FOMC meeting later this month, gold may have more room to fall if policymakers are forced to turn more aggressive in the face of unwavering inflation, with next week’s US CPI release potentially providing such a catalyst.

 

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