Fed Hawks Keep Gold Price Capped Amid Renewed Tightening Expectations
The US Dollar Index (DXY) regained some ground on Monday despite Treasury yields falling in the back half of the day. The XAU/USD trades at $4,350 after peaking at nearly $4,383 due to renewed tightening expectations outweighing softer Treasury yields.
Fed officials have been hawkish following last week's interest rate hike, with St. Louis Fed President Alberto Musalem stating that 'without further policy restraint, it is more likely inflation will remain substantially above 2% target in 18 months from now.' The Chicago Fed's Austan Goolsbee added that the Fed can't ignore repeated and consistent supply shocks.
The hawkish tilt by most Fed officials has capped the Gold price on the upside. However, rising geopolitical tensions and broad US Dollar weakness could prompt buyers to purchase the yellow metal.