FUNDAMENTAL OVERVIEW Gold has extended the losses yesterday after a technical breakout of the recent consolidation.
FUNDAMENTAL OVERVIEW Gold has extended the losses yesterday after a technical breakout of the recent consolidation. The main thing that’s been weighing on precious metals has been the hawkish central banks amid the renewed inflation risk.
That looks unlikely to change anytime soon as Trump has rejected Iran’s proposal to first open the Strait of Hormuz and then hold nuclear talks. Unfortunately, with US stock prices at all-time highs Trump might not feel any pressure to concede. This might even set the stage for the next big selloff if the Strait of Hormuz remains closed for much longer and oil prices stay elevated, thus forcing the Fed to hike interest rates in the coming months.
Today, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could add more pressure on gold. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME On the daily chart, we can see that gold extended the losses as the US-Iran stalemate pushed oil prices back into triple digit levels.