Gold prices declined as the US Dollar rose against most of its major counterparts and front-end Treasury bond yields gained ground, tarnishing the appeal of non-interest-bearing and anti-fiat assets. The move came against a backdrop of firming Fed rate hike bets and may have reflected pre-positioning ahead of the upcoming FOMC policy announcement, which is widely expected to set the stage for tightening in December.
Priced-in policy bets implied in Fed Funds futures put the probability of a rate hike at the year’s last meeting of the policy-setting committee at a hefty 97 percent. An outcome that investors deem “hawkish” in this context seems like a more difficult proposition than a “dovish” one. With that in mind, the yellow metal might manage something of a recovery in its aftermath.
GOLD TECHNICAL ANALYSIS – Gold prices are still trying to negotiate support in the 1266.44-69.10 area (October 5 low, 38.2% Fibonacci expansion). A daily close below it exposes the 50% levelat 1257.69. Alternatively, a move above support-turned-resistance at 1277.16 opens the door for a retest of 1291.06, the October 20 high.
Reference: DailyFX
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