Gold has been in a range of 1780-1830 in the last three weeks. What helped gold rise from 1680-1730 levels is the impression that the Fed tightening was probably going to end soon. But that was not to be. The Fed rate action showed the same level of aggression as before re-affirming the earlier stance that they would not rest till the job is done. It looks like gold prices have stabilized at a higher level close to the current range of 1780-1830. While earlier it was seen that the institutional or central bank demand was coming back gradually, there needs to be more consistent buying before the market could rise further.
Gold may be reined in by higher money market rates in the US as the rates after falling for over a month has started moving up swiftly. A stronger dollar and rising rates could blunt the current uptick to some extent. Consistent rise in yields and expectations of Fed rate hikes will keep gold prices under pressure. Policy changes, if any, will be at least two quarters away given the persistence of inflation as also target levels being quite far away from the current inflation reading. Gold is poised to move up with the right indications in interest rates, especially US rates.
