Gold prices plunged to their lowest level since April 7 on the Federal Reserve’s anticipated aggressive tightening of monetary policy. Since the half-percentage point rate hike in May is already locked in, the market expects higher rate increases in the coming months. The hawkish Fed bets, in turn, boosted the dollar to an almost two-year peak. And the robust greenback made the bullion more expensive for investors using rival currencies.

The good news for the yellow metal is that the U.S. 10-year Treasury yields fell below recent highs. It limited the losses of the non-interest-bearing gold. Spot gold has recently been trading at around $1,918.60 per ounce as of the time of writing.

Stephen Innes, a managing partner at SPI Asset Management, commented that the rising U.S. real yields would lower gold prices. Despite this, he believes the bullion still has some intrinsic value given the slowdown in the global economy.

On the technical front, FXStreet senior analyst Dhwani Mehta suggested that the demand for the dollar will push gold prices towards $1,900 an ounce. The greenback is currently the investors’ preferred hedge against hawkish Fed bets. In addition, gold’s 14-day Relative Strength Index is trending below the midline, indicating further declines.

Moreover, bullion prices closed below the 21- and 50-Daily Moving Averages, which are at $1,943 and $1,937, respectively. If the yellow metal slips below $1,915, Mehta expects a further sell-off to the $1,900 level. She sees the next support level at the March lows of $1,890.

DailyFX strategist David Song added that the updated U.S. PCE Price Index would likely push gold prices down. The PCE, the Fed’s preferred inflation gauge, is expected to decline for the first time in eight months. And any sign of a reduction in the inflation rate will drive the market away from inflation hedges.

In physical trading, gold demand in India picked up slightly this week after prices eased. Local prices dropped from 55,559 rupees per 10 grams last month to 52,200 rupees on Friday. However, many retail consumers are still waiting for higher price drops and holding back their purchases.

In China, the demand remains subdued due to COVID-19 restrictions. It prompted dealers to raise discounts from $4.3-$6 last week to $10 per ounce. A Shanghai dealer said the market remains quiet because the city is still locked down.