The Fed admits it and gold is losing significant levels, and the dollar is wild, what’s next? by Investing.com

Investing.com – Fed officials’ comments appear to be scary, as markets catch their breath after new hints, the yellow metal doesn’t need to fall into a new trap of uncertainty and confusion.

“Gold is starting to find support here at the $ 1,775 level,” John Finney, director of business development at Guardian Gold Australia, told Bloomberg. “We are starting to see investors moving back to metals at these lower prices now, as the Fed is over The hawkish turn appears to be It has been valued.

But gold has now broken those support levels, recording losses of over $ 13 at those times.

What is happening?

It appears that confusion over when to change interest rates and mixed signals from the US Federal Reserve will remain the dominant feature of investor transactions over the coming period. And a member of the US Federal Reserve, Randall Quarles, said last night, Monday, that members of the bank’s monetary policy committee are well aware they can get the rates wrong.

“If within a year we don’t see inflation stabilizing near the 2% target, the bank has the tools to fix it,” Quarles said. Investors are now focusing on expected US labor market data, as well as indicative data expected to be released throughout the week’s trading session.

Confusion over the Fed’s policy outlook has been brewing for nearly two weeks after a sharp change in its latest policy decision that scared investors.

The dollar strengthened to near its highest level in nearly 8 weeks, with many traders largely reluctant to bet before the timing of the Federal Reserve’s stimulus program halt changes.

He said a week ago that fear of inflation would not be the only factor in policymakers’ action; They encourage a broad and inclusive recovery of the labor market.

And after heavy losses last week that exceeded 5%, it looks like gold is on track to record more losses until the date of the next data. And gold fell, the spot delivery price for an ounce of gold in those times of over $ 13, dropping about 0.7% to levels of $ 1,766.

With this trading range, and until gold is above $ 1,800 or below $ 1,760, it looks like a short-term sideways trend, ”said Kyle Rhoda, analyst at IG Market. On the other hand, it reached the highest levels of 92 points, and the index which measures the performance of the US currency against a basket of major currencies rose.

The dollar appreciated against 0.13% and appreciated against 0.22%, while it appreciated against the Australian dollar by around 0.42%.

In the same context, the 10-year yield rose to 1.494%, an increase of 0.014 points.

The gold market has seen lukewarm trading, with some market players still confused about the outlook for Fed policy; A number of US central bank policymakers have turned to a monetary tightening tone despite a lower-than-expected US inflation reading last week.

The dollar is hovering below a two-month high against its rivals, raising the cost of gold for holders of other currencies. But Mir said “the dollar will start to fall again as the stage is clear on the front of an interest rate hike for at least 18 months to two years.”

Expectations

“While gold rebounded on the sell off two weeks ago, gold continued to trade below the 100-day moving average,” the OCBC said in a note, adding: ” We expect gold to resume its downtrend this week as businesses and markets continue to feel risky as they look to the outlook for monetary tightening from the Fed. ”

However, optimism remains in some market segments, OCBC said. Today, investors are waiting for data from the Consumer Confidence Index; It is expected to drop from 117.2 to 119.0, and a higher reading indicates increased consumer optimism.

poor vision

Allianz (DE 🙂 chief economist Mohamed El-Erian believes that high inflation levels in the United States are not temporary and that the Fed is wrong in its estimates. In an interview with CNBC, El-Erian said: “Fed officials are underestimating inflation, which risks exposing the economy to another recession.”

“Every day I see evidence that inflation is not temporary and I fear the Fed is lagging behind,” Allianz chief economist said, adding that if that materializes, the Fed could having to raise rates and tighten monetary policy sooner than it would like. .