Spot gold tumbles to a 10-month low as investors absorb U.S. Fed minutes

July 7, 2022 - 1 month ago

After a significant selloff earlier in the week, the precious yellow metal seesawed above the key support area of $1,738-41 Wednesday, as investors combed through the minutes from the U.S. Federal Reserve’s most recent interest rate policy meeting for clues about what the U.S. central bank may do next to tackle rising inflation.

The Fed’s minutes offered no major surprises for the global markets as investors will now focus on what the U.S. Federal Open Market Committee will say in July’s meeting.

Meanwhile, the minutes from the Fed’s two-day meeting last month show that the central bank’s policymakers concluded higher interest rates could be needed to restrain what they saw as a worrying trend.

The policymakers also acknowledged that more rate hikes could weaken the economy.

The Fed is expected to push ahead with another three-quarter percentage point hike this month.

Meanwhile, the US dollar index (US DXY), which tracks the greenback against a basket of its peers, increased +0.5% to 106.92 after soaring to a 20-year high of 107.05.

Based on the technical assessment, the Relative Strength Index (RSI) indicator, 3-daily and weekly ‘lookback’ is negative and oversold, while the Moving Average Convergence Divergence (MACD) holds a negative signal, while the ADX indicator supports a bearish trend in both timeframes.

As the market bears weigh on the region of $1.738-41, a decisive break here would expose the region of $1,686-91.

The resistance is located from $1,764-66 to $1,784-88.