With A Week to Fed Meeting, Gold Bounces in and Out of $1,700
2022.07.20 22:17
By Barani Krishnan
Investing.com — Gold’s hold above $1,700 is proving to be precarious — even without Fed officials constantly bombarding the airwaves with rate hike teasers.
With a week to go before the central bank’s decision on July rates, benchmark gold futures for August delivery on New York’s Comex was back under $1,700 an ounce in Wednesday’s post-settlement trade, after finishing the official session just above the key psychological support.
By 2:16 PM ET (18:16 GMT), August was down $12.55, or 0.7%, at $1,698.15.
It earlier closed the session virtually on the $1,700 mark, finishing at $1700.20 after a dip of $10.50, or 0.6%, on the day.
Since last week’s 11-month low of $1,695, gold bulls haven’t been able to pull the market decisively higher despite Fed officials refraining this week from making comments in customary observance of the 10-day moratorium on speeches before their July 27 decision on rates.
There was no major driver for gold’s renewed weakness on Wednesday, except perhaps for the dollar — which saw its first rebound in almost a week, albeit to levels well below last week’s two-decade highs.
“There was general consensus that if the dollar rebounds, gold could go back under $1,700 and I guess that’s what you’re seeing,” said Phillip Streible, precious metals strategist at Blueline Futures in Chicago.
The Dollar Index, which pits the U.S. currency against six other majors, revisited 2002 peaks last week after the US Consumer Price Index came in at four-decade highs of 9.1% for the year to June. The dollar’s rally then prompted money market traders to bet on a record 100-basis point Fed rate hike for July. Those rate hike bets have since fallen significantly, with the consensus now for a 75-basis point hike.
Aside from the absence of Fed speak, this week has also been unusually light for U.S. macroeconomic data, allowing traders greater discretion on direction, fund flows and trade volumes. While gold bulls had an even chance of seizing the momentum, inaction has appeared to be the greater part of their valor.
