Solid macroeconomic results lifted U.S. Treasury yields across the curve, with the two-year note surging more than 15 basis points and coming within striking distance from hitting 4.9%, the highest level since March 9.
The move in rates, in turn, boosted the U.S. dollar against its lower-yielding counterparts, leading the DXY index to erase overnight session losses and climb into positive territory, creating a negative backdrop for precious metals, at least initially.
The remarkable resilience of the U.S. economy is likely to give the FOMC cover to raise rates again in the coming months, in line with its guidance. The Fed paused its hiking campaign in June, but signaled the process was not over, projecting 50 basis points of additional tightening through year’s end.
Markets were initially skeptical of the Fed's hawkish roadmap, based on the assumption that the country was headed for a recession, but incoming information has seriously undermined that premise. Not only is the economy not tanking, it appears to be stabilizing and improving at the margin.
Against this backdrop, we could see a quarter-point hike in July and another one of the same magnitude in September. This scenario could keep both nominal and real yields biased to the upside, weighing on gold prices in the near term. This could mean further losses for bullion heading into the third quarter.
GOLD
BUY 1908 - 1909💯💯
✅ TP1: 1915
✅ TP2: 1920
🛑 SL: 1905
The move in rates, in turn, boosted the U.S. dollar against its lower-yielding counterparts, leading the DXY index to erase overnight session losses and climb into positive territory, creating a negative backdrop for precious metals, at least initially.
The remarkable resilience of the U.S. economy is likely to give the FOMC cover to raise rates again in the coming months, in line with its guidance. The Fed paused its hiking campaign in June, but signaled the process was not over, projecting 50 basis points of additional tightening through year’s end.
Markets were initially skeptical of the Fed's hawkish roadmap, based on the assumption that the country was headed for a recession, but incoming information has seriously undermined that premise. Not only is the economy not tanking, it appears to be stabilizing and improving at the margin.
Against this backdrop, we could see a quarter-point hike in July and another one of the same magnitude in September. This scenario could keep both nominal and real yields biased to the upside, weighing on gold prices in the near term. This could mean further losses for bullion heading into the third quarter.
GOLD
BUY 1908 - 1909💯💯 ✅ TP1: 1915
✅ TP2: 1920
🛑 SL: 1905
