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Still-hawkish Fed sets gold on course for weekly drop

Gold prices were forced to reconcile this week with a Fed that remains intent on sending US interest rates even higher, much to the chagrin of gold bulls.

A higher peak for US interest rates lessens the appeal of zero-yielding bullion.

Such a notion has dragged the precious metal back into sub-$1800 domain, sandwiched between its 200-day simple moving average (SMA) and its 21-day counterpart at the time of writing, on course for a weekly decline.

Still-hawkish Fed sets gold on course for weekly drop

To be fair to gold bulls, prices have risen by as much as 12% since they were sent on their merry way following the release of October’s higher-than-expected unemployment rate, which suggested that the Fed’s rate hikes are having the intended effect of causing some demand destruction (more people losing their jobs) and in turn ease inflationary pressures.

However, gold has been consolidating around the $1800 mark of late as markets price in a higher-than-expected peak for US interest rates, based on the Fed’s latest policy cues.

Although gold is still adhering to its recent uptrend, there has to be more signs that the Fed can truly warm up to its eventual pivot, before bullion can continue posting higher-highs above $1800.



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