- Gold prices were lower for a third straight day, hitting a more than one-week low on Wednesday.
- Tough Fed expectations, rising U.S. bond yields support and pressure the dollar.
- Risk aversion fails to support safe-haven XAU/USD ahead of FOMC minutes .
Gold attracts fresh selling near $1,782 on Wednesday , and traded lower for the third day in a row. Intraday selling sentiment remained unchanged during the North American morning and dragged XAU/USD to a 1-1/2-week low, trading around $1,765-$1,764 in the last hour.
U.S. dollar moves higher, back near monthly highs hit the previous day, which turns out to be weakening dollar-denominated gold key factor in demand. Despite signs of easing in U.S. inflation, investors appear confident the Fed will stick to its policy tightening path. Wednesday’s mostly upbeat U.S. retail sales data reaffirmed the market’s bets and continued to be a bullish factor. At the same time, the Fed’s hawkish expectations have triggered a new round of gains in US Treasury yields. This provided additional support for the dollar and further pushed flows away from the non-yielding yellow metal. That being said, heightened recession fears and a safe-haven urge could provide some support for safe-haven gold and help limit any further losses, at least for now.
Fears of a global recession have reduced investor appetite for assets considered riskier, buoyed by general weakness in equities can be seen in the tone. That could deter bear traders from making aggressive bets ahead of the FOMC minutes, which are due later in the U.S. session. Market players will be looking for clues about a 75 basis point rate hike in September.
The Fed’s policy outlook will play a key role in influencing recent dollar price dynamics and provide a fresh directional boost to gold. From a technical standpoint, the recent failure to gain acceptance or build momentum above the $1,800 mark supports the prospect of further depreciation in the near term. Therefore, any attempted recovery could still be seen as a selling opportunity.
Technical level worth noting
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