PULSE PRICE OUTLOOK: FEED MEETING, REAL YIELD, US DOLLAR EYE
- Gold prices clinging to the psychological level of $ 1,800 in the consolidation of the precious metal
- Gold volatility is likely to pick up next week due to the risk surrounding the Fed meeting
- The outlook for the price of gold depends mainly on how the real return and US dollar respond
The price of gold fell -0.6% lower on the balance sheet last week to trade back around the psychologically significant $ 1,800 level. This marks the first week since the decline four weeks in a row. The precious metal stood in a surprising headwind as the recent sharp drop in yields saw relief and the US dollar strengthened. Gold prices tend to move in the opposite direction to the yield trend and the broader DXY index.
That means the looming Fed interest rate decision, scheduled for release on Wednesday, July 28 at 18:00 GMT, is poised to spur momentum. This creates significant potential for gold volatility to accelerate with Treasury profitability and USD price promotion. Same time as Federal Reserve monetary policy is expected to remain unchanged, increasing the risk that the central bank will change the language of its press release to announce forthcoming adjustments in the purchase rate of assets.
PAY PRICE TABLE WITH A REAL YIELD TRANSITION WITH A 5-YEAR AARD
It brings attention FOMC guidelines for significant further progress towards the maximum targets for employment and price stability. Inflation rates have risen significantly in recent months, which has probably contributed to the decision of Fed officials to pursue their planned tightening schedule. must those of the previous month meeting.
Given the still persistent narrative of temporary inflation, as well as the worrying delta problems and recent NFP report, I think the Fed will probably repeat its current position and send messages. This may mean that real yields remain under pressure, which in turn keeps gold price activity well supported. On the other hand, if the updated Fed statement gives a higher real return, it is likely to correspond to lower gold prices.
COST VALUE CARD WITH OUR DOLLAR INDEX OVERLAID
In addition to the real return, I will monitor how the US dollar trades around the Fed next week to help assess the future direction of the price of gold. The influx of broad-based US dollar strength following the federation meeting could lead to a sharp fall in the price of gold. However, if this scenario materializes, then gold withdrawal could offer bulls attractive opportunities to weigh, as discussed in my article Top Q3 Top Trading Idea.
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