Gold Moves Lower As Traders Bet On Hawkish Fed
Gold is losing ground as traders focus on strong economic data from the U.S. and bet that Fed will raise rates in December.
GDP Growth Rate was +3.4% in the third quarter, compared to analyst forecast of 3.2%. The report showed that U.S. economy continued to grow at a robust pace.
Yesterday, Fed left the federal funds rate unchanged despite inflation risks. During the press conference, Fed Chair Warsh said that the move was not influenced by upcoming midterm elections.
Anyway, traders believe that Fed will be forced to raise rates in December due to high oil prices and strong economy. Accoring to FedWatch Tool, the probability of a rate hike at the next meeting is 79.6%. At this point, the market believes that Fed will also raise rates in March 2027.
Interestingly, Treasury yields moved lower despite worries about potential rate hikes from the Fed. The yield of 2-year Treasuries declined towards the 4.66% level, while the yield of 10-year Treasuries pulled back below the psychologically important 5.00% level. I’d note that falling Treasury yields did not provide support to gold markets in today’s trading session.
U.S. dollar pulled back against a broad basket of currencies as forex traders focused on falling Treasury yields. Weaker dollar is bullish for dollar-denominated commodities as it makes them cheaper for buyers who have other currencies. However, dollar’s pullback did not provide support to gold as traders focused on longer-term Fed policy outlook.
Today, traders also focused on ECB Interest Rate Decision. The European Central Bank left the interest rate unchanged, in line with analyst expectations. ECB also signaled that it could raise rates at the next meeting in December.
Currently, gold is trying to settle below the support level at $4000 – $4020. In case this attempt is successful, gold will head towards the next support, which is located in the $3890 – $3910 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
Silver Tests Support At $51.00 – $52.00
Silver is losing ground as gold/silver ratio climbed towards the 77.00 level. If gold/silver ratio settles above 77.00, it will head towards the 78.00 level, which will be bearish for silver.
From the technical point of view, silver attemtps to settle below the support at $51.00 – $52.00. If silver manages to settle below the $51.00 level, it will head towards the next support at $47.00 – $48.00. RSI has recently moved into oversold territory, but there is enough room to gain downside momentum in the near term.
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See all Gold forecastsPlatinum Is Under Strong Pressure
Platinum is losing ground amid broad pullback in precious metals markets. Palladium prices are down by -1.2%, which is bearish for platinum.
The nearest support level for platinum is located in the $1440 – $1460 range. A successful test of this level will open the way to the test of the next support at $1350 – $1370.
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