Gold Talking Points
The recent rebound in gold appears to be losing steam as it largely preserves the range-bound price action from earlier this week, and the broader outlook for the precious metal remains tilted to the downside as both price and the Relative Strength Index (RSI) preserve the bearish formations from earlier this year.
Gold Price Forecast: Subdued Rebound Keeps Bearish Trend Intact
Gold prices[1] are back under pressure, with the U.S. dollar[2] gaining ground against its major counterparts, and the precious metal may continue to consolidate over the remainder of the week as market attention turns to the Federal Open Market Committee (FOMC) interest rate decision on August 1.
Even though the FOMC[3] is widely expected to keep the benchmark interest rate on hold, Chairman Jerome Powell & Co. are likely to implement higher borrowing-costs over the coming months as officials warn ‘gradually returning interest rates to a more normal level as the economy strengthens is the best way the Fed can help sustain an environment in which American households and businesses can thrive.’
In turn, a batch of hawkish comments may sap the appeal of gold as the FOMC appears to be on track to further embark on its hiking-cycle, and growing expectations for four rate-hikes in 2018 may reinforce a bearish outlook for gold prices on the back of expectations for higher U.S. Treasury yields.
Moreover, retail sentiment remains stretched as the IG Client Sentiment Report[4] shows 86.2% of traders are net-long gold, which compares to 85.8% from earlier this week, while the ratio of traders long to short stands at 6.26 to 1
