Gold Is Under Pressure After Brainard’s Hawkish Comments

Key Insights

• Gold is moving lower as traders are focused on the hawkish Fed. 
• Treasury yields are testing new highs, which is bearish for gold. 
• A move below the support at $1915 will push gold towards the next support level at $1900.

Gold Is Losing Ground After An Unsuccessful Attempt To Settle Above $1935

Gold declined towards the support level at $1915 after hawkish comments from Fed Governor Lael Brainard, who focused on fighting inflation.

Brainard said that the Fed will have to raise rates and cut its balance sheet to push the U.S. monetary policy closer to a neutral position. As the U.S. inflation is close to the 8% level, the current monetary policy remains extremely stimulative, so the Fed will have to act fast.

Brainard’s comments pushed Treasury yields towards the 2.60% level, which was bearish for gold. Interestingly, the current yield curve is mostly flat, as 2-year Treasuries yield 2.56%, while 30-year Treasuries yield 2.61%. In case yields continue to move higher, gold may move below the important support level at $1915.

Not surprisingly, gold’s pullback put pressure on the VanEck Gold Miners ETF, which moved closer to the $38 level. In case gold gets below the $1915 level, VanEck Gold Miners ETF will find itself under more pressure.

Technical Analysis

Gold is testing the support level at $1915. The 50 EMA is located near $1910, so gold will likely get material support in the $1910 – $1915 area.

A move below the 50 EMA will push gold towards the support level at $1900. In case gold declines below this level, it will head towards the support at $1880. A successful test of the support at $1880 will open the way to the test of the next support at $1865.

On the upside, the nearest resistance level for gold is located near the 20 EMA at $1935. If gold gets above this level, it will head towards the resistance at $1950. A move above the resistance level at $1950 will open the way to the test of the resistance at $1965.

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