Gold Price Forecast: XAU/USD Hinges On Fed Meeting, Real Yields

On the other hand, if Fed Chair Powell changes his tune and signals appetite for pushing asset purchases further down the curve to keep a lid on long-term borrowing costs, this would likely provide a much-needed fundamental catalyst to reinvigorate gold bulls.

Gold Data provided by IG. Sentiment: Mixed

CHANGE IN LONGS SHORTS OI
DAILY -2% -6% -3%
WEEKLY -1% 14% 0%

Gold price action might also gyrate in response to Fed guidance on supplementary leverage ratio requirements for banks. The Fed enabled US banks to expand their balance sheets by temporarily excluding US Treasuries and deposits held with Federal Reserve banks from capital adequacy calculations, which broadly increased SLRs.

Signaling a walk-back from this temporary relaxation in capital requirements could hurt demand for US Treasuries, and in turn, push yields higher and gold lower.

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