US dollar volatility is likely to increase over the next 24-36 hours with a host of Fed speakers, economic releases, and the latest FOMC minutes all hitting the wires. The FOMC minutes are expected to confirm that the central bank remains committed to tightening monetary policy to curb inflation despite the recent lower-than-expected US cpi print fueling thoughts of a policy slowdown. The US market then closes on Thursday for the Thanksgiving Holiday, while the next day is an unofficial holiday, Black Friday. Both days will see sharply reduced levels of market activity.
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Short-dated US Treasury yields have been moving higher recently with the one-year touching a multi-decade high of 4.85% (currently 4.79%) while the two-year recently hit a 15-year high yield of 4.88% (currently 4.50%). These yields will continue to support the US dollar, keeping pressure on the precious metal. US interest rates have been the driver for gold over the past months, and with the Fed still intent on tightening, any further upside for gold will be difficult until the central bank signals that interest rates are at, or close to, an appropriate level.
The price of gold is pushing higher today after four days of losses. We looked at how the precious metal was potentially building a bullish flag setup recently and while this may still be possible, any further losses will make this unlikely. In the short term the price of gold is likely to trade between $1,729/oz. and $1,787/oz. with support more likely to be tested.