Gold continued its rally higher this morning following yesterday’s bounce of the YTD low. The rally agreed with a retracement in the dollar index and markets processing the aftermath of the FOMC meeting. However, rumors returned in the Asian session that China is looking at opening up air travel after a two-year Covid ban, which looked to boost market sentiment.
The little shift in rhetoric by Fed Chair Powell has seen markets price in an extra 25bp to the peak Fed funds rate for 2023. This strengthened Dollar which saw the YTD low on gold appear vulnerable. This, coupled with strong US Treasury yields, seemed to suggest a new YTD low, and a possible test of the $1600 level may be on the cards. As the price continues to remain rangebound between $1614-$1670, bears will keep showing interest, which may halt any further upside move as we close out the week.
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