The U.S. dollar has been supported by rising short-term bond yields. All eyes will be on the Federal Reserve policy meeting on Wednesday, for any indications on the number of rate hikes this year. The latest data from the Commodity Futures Trading Commission (CFTC) showed that speculative traders on the Chicago Mercantile Exchange reduced their net-long positions in gold to 167948 contracts, from 183823 a week earlier.
The gold market tends to weaken going into the Fed meetings, at which a rate hike is expected, so we will probably start the week in a similar environment. Also keep in mind that this type of pressure usually creates a temporary reaction and once the Fed makes the actual announcement, XAU/USD may reverse its course - unless the statement sounds more hawkish than what the market is expecting. From a technical perspective, bearish weekly close (the lowest weekly close since late December) also suggests more selling pressure early this week. The market is trading below the 4-hourly Ichimoku cloud; plus, the Tenkan-sen (nine-period moving average, red line) and the Kijun-sen (twenty six-period moving average, green line) are negatively aligned on both the daily and the 4-hourly charts.
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