Weekly changes: XAUUSD -5.62%
XAUUSD dropped to 1,764 USD after a Federal Reserve official said high inflation might call for the U.S. central bank to tighten its monetary policy next year. Gold is trading at its lowest levels since April, having the highest weekly loss in 15 months. Higher rates dampen demand for non-interest-bearing gold as an alternative asset.
Nevertheless, Fed Chair Jerome Powell has cautioned that discussions about raising interest rates would be 'highly premature'. His statement appears to be that the Fed is not going to do anything. They will allow this inflation spike to run its course, which the Fed believes will be transitory.
KEY POINTS
The important thing is that the Fed is not raising rates tomorrow. The Fed's plan suggests the earliest increase is 30 months away. Gold is highly oversold. Prices will probably struggle to mount a quick recovery since they broke several key technical levels in just two days.
Important levels: 1,678, 1,721, 1,769 , 1,790 , 1,816
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