Gold price falls back sharply as the Fed is expected to deliver hawkish guidance on interest rates. The Fed may keep expectations of further policy tightening alive due to strong wage growth. Middle East tensions keep the broader appeal for Gold bullish. The precious metal falls sharply even though markets widely expect that the Fed will keep interest rates unchanged in the 5.25%-5.50% range.
An upbeat labor and factory data would strengthen the appeal for the US Dollar and Treasury yields. Robust economic data would also allow Fed policymakers to keep interest rates elevated for a longer period. On the geopolitical front, Hamas’ promise of releasing hostages in a few days has eased safe-haven bets marginally. Meanwhile, the Israeli Defence Forces has expanded their ground attack against Hamas in the northern section of the Gaza strip.