Gold Price Forecast: XAU/USD could print a new low on continued dollar strength – TDS
14.10.2022, 13:44

Gold Price Forecast: XAU/USD could print a new low on continued dollar strength – TDS

Gold turns lower and remains vulnerable. The chance of yet another supersized 75 bps rate hike at the November FOMC meeting is set to help the US dollar, economists at TD Securities report.

Disinflation everywhere but the CPI data

“Disinflation everywhere but the CPI data. That is the narrative emerging from the sharp U-turn in risk sentiment following the hot inflation print, which acknowledges that the soaring shelter components of inflation hold long lags to the disinflation observed in real-time rent data. However, this fails to acknowledge that private rents have been slowing for months, with the relief observed in private rents only likely to appear in the CPI data by the second half of next year.” 

“Stripping out shelter, core services inflation printed a new post-covid high and continues to run hot. In turn, the recovery in risk assets and precious metals may instead be a symptom of market illiquidity, which cuts both ways.” 

“Gold prices still need to break above $1,730 to extend the short squeeze. Nonetheless, with markets already fully pricing in a 75 bps hike for the next FOMC meeting, gold prices will need continued dollar strength to print a new low.”

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