New Fed pressure on gold

Gold fell as expectations that the Fed will continue its hawkish stance outweighed expectations that interest rate hikes will soften. Gold fell as expectations that the Fed will continue its hawkish stance outweighed expectations that interest rate hikes will soften soon. Gold traded below $1,762 per ounce in the spot market. The Fed’s efforts to combat inflation by implementing a series of major interest rate hikes contributed to the precious metal’s 14 percent decline from its peak in March. The precious metal, which is priced in dollars and does not yield interest, traditionally tends to have a negative correlation with interest rates. U.S. retail sales posted their biggest increase in eight months in October, indicating that demand remained firm despite the highest inflation in 40 years and the worsening economic outlook. This situation also signaled that the Fed may need to continue tightening to curb inflation. “Gold will ultimately act as a safe haven, but the primary factor at play right now is the Fed’s rate hike path, which also determines the direction of the dollar,” said Oanda Senior Market Strategist Ed Moya. Some Fed officials supported expectations that they would reduce rate hikes to 50 basis points starting next month, while emphasizing that the increase should continue in 2023.