Gold – Slides as Fed Resists Yield Curve Control

Another painful stumble for gold

Gold has given up overnight gains as the rebound from Wednesday’s slide was short-lived.

The culprit for the latest gold dive was the Fed, who’s reluctance to get on board with yield curve control jolted yields higher, in turn dragging the dollar off its lows.

This came on top of the central bank raising concerns about considerable risks to the economic outlook and slightly amending its language on the prospect of more forward guidance on rates.

I don’t see this as a big shift from the Fed so the moves may not last but it is another reminder of the vulnerability of precious metals despite being on such a stong run, more generally. Gold and silver both fell around 3.5% and looks susceptible to further corrections.

The outlook remains bullish in both cases, with the dollar having broken through important support this week and central banks unlikely to even consider tightening or a considerable period of time.

 

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam