Ole Hansen: Gold given its sensitivity to both (dollar and yields) continues lower as the loss of momentum forces long-liquidation from funds
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Current market situation may be considered as mysterious. Stock feel quite good, dollar isn't that weak and gold trades near $1800.
FXMAG.COM: Gold has decreased for three weeks in a row, what price would you call a "fair" one at the moment? Is it $1800 level?
Ole Hansen (Saxo Bank): Recent strength in US CPI and PPI data has led speculation the FOMC may revert to a 50 bp rate hike again. Fed funds expectations have moved higher as a consequence, and gone are any expectations for a rate cut this year. The result of this being another loss of risk appetite across markets with stocks and commodities trading softer as the dollar and yields trade higher. Gold given its sensitivity to both continues lower as the loss of momentum forces long-liquidation from funds. As a consequence of these developments gold now trades below $1828, the 38.2% retracement of the rally since November, and further dollar-led weakness could see it target support in the $1792 to $1776 area. While s/t spec selling weighs, our bullish outlook has not changed with physical demand, just like 2022, providing a soft floor under the market.
Recent strength in US CPI and PPI data has led speculation the FOMC may revert to a 50 bp rate hike again.
As we wrote in our recent published short-term outlook we felt that some of the strong rallies seen at the start of the year was correct regarding the direction of gold, as well as copper and crude oil would travel in 2023, but at the same time we questioned the timing saying it might have happened too early.
Read next: EUR/USD And AUD/USD Are In Downward Trend, USD/JPY Hit 135.00, GBP/USD Is Below $1.20| FXMAG.COM
