US Economic Strength Crushes Gold as Dollar Continues Winning Streak

Gold prices took a hit overnight as the US dollar rose for its fourth consecutive session. The market is in a 'one-plus-one' mindset, expecting at least one more Fed hike by April. The strong US economic data, including the S&P Global PMI jumping to 58.4, its strongest reading since 2021, and Treasury yields pushing higher, are contributing to this expectation.

The rising US yields have become a major concern for gold investors, as it makes zero-yielding assets like bullion less attractive. According to the Bloomberg chart on the Fed-rate/gold relationship, bullion has effectively become a high-frequency referendum on the US rates path.

Gold fell 1.7% on Wednesday and is currently trading around $4,290/toz. While some investors are taking advantage of the dip, prudence suggests waiting for gold to break back through the $4300-15 range before confirming a positive momentum swing.