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Gold slips to 1-1/2 week low, below $1,770 before FOMC minutes

by Elena Martin   ·  August 17, 2022   ·  
On Wednesday, gold draws new selling in the $1,782 area, declining for a third consecutive day. Through the early North American session, the intraday selling trend persisted unabatedly, pushing the XAU/USD to a one-and-a-half-week low in the penultimate hour, in the $1,765–$1,764 range.

Gold prices decline for the third day in a row, reaching a low that surpasses one week on Wednesday. Rising US bond rates and hawkish Fed predictions support the USD and put some pressure on it. The risk-off sentiment does not help the safe-haven XAU/USD before the FOMC minutes.

One primary reason for reducing demand for dollar-denominated gold is the US dollar, which is increasing and getting closer to the monthly high set the day before. Investors seem to be confident that the Fed will maintain its program of tightening monetary policy despite signals of slowing US inflation. The US Retail Sales numbers released on Wednesday, which were primarily positive, confirm market predictions and continue to support the dollar.

Meanwhile, hawkish Fed predictions lead to a new run higher in US Treasury bond rates. This gives the dollar even more support and helps divert flows away from the non-yielding yellow metal. However, rising recessionary concerns and the risk-off sentiment may provide some support for gold, a haven asset, and assist in halting further declines temporarily.


A generally negative mood around the equities markets reveals investors’ desire for perceived riskier assets is tempered by concerns about a worldwide economic slump. This might discourage bearish traders from making large wagers before the FOMC meeting minutes, due out later today in the US session. Market participants are watching for signs that a rate increase of 75 basis points might occur in September.

The Fed’s policy perspective would significantly impact the short-term USD price dynamics and give gold a new sense of direction. Technically, the recent recurrent failures to gain traction or maintain the momentum above the $1,800 level boost expectations for a further near-term depreciating trend. So, any effort at recovery might still be seen as a chance to sell.

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