Gold Prices Falls Flat Ahead of FED’s Rate Tightening

Gold

Gold prices have been flat since yesterday, causing traders who were taking advantage of the precious metals’ strong gains earlier this week to struggle. Gold was triggered by the BoE’s actions to temporarily inject liquidity into the financial system to avoid pension fund insolvency issues.

That action promoted market expectations that other central banks could follow in the BoE’s footsteps, thereby affecting Gold. the hawkish 2023 Federal Reserve expectations by the market have been slashed back. Thus, the USD is lower as Treasury yields wobbled. Gold seems only to thrive when the USD and treasury yields go low.

XAU/USD traders patiently await US PCE data containing the Fed’s preferred inflation gauge. A stronger surprise could easily revive 2023 rate hike bets, reversing the upward move in the yellow metal earlier this week.

Traders have, however, decided to be prudent this week and not take chances with the metal. The PCE Deflator is seen at 4.7% y/y for August, up from 4.6% prior. The Citi Economic Surprise Index soaring higher since June indicates that economists are somewhat underpricing the health and vigor of the country.

An upward surprise may cause the US Dollar and bond yields to rise to weigh against gold.

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