Gold Slips, Awaits FOMC
26 January 2022
The bullion failed to hold this week's gains and retreated, heading into today's crucial Fed meeting.
Gold was down 0.5% during the London session, sliding to 1,840 USD, although the metal has held quite firmly during the recent market turmoil.
Currently, short-term interest rate futures price fully price in a 25bps rate hike in March Additionally, investors also anticipate more details on the balance sheet reduction, which is expected to start before summer.
"We expect inflation to remain high and interest rates to rise more than investors are expecting today," said Norbert Frey, head of portfolio management at Fuerst Fugger Privatbank. "A rising interest rate environment is leading to a revaluation of all business models, and we think 2022 can be a year of value stocks."
The support could now be near previous highs for gold at around 1,830 USD. If the metal drops below it, we might see a quick decline toward 1,805 USD, where both the 50 and 200-day moving averages are converged.
Alternatively, if the FOMC sounds dovish, we could see a strong rally, targeting this week's highs of 1,855 USD, with the eyes then setting at November highs in the 1,870 USD region.