Market update: gold prices suffer with greenback bid after FOMC minutes

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We got minutes from the latest FOMC (Federal Open Market Committee) meeting last night, and it showed policymakers believed "ongoing" rate hikes "would be appropriate" with "inflation still well above" their goal and requiring "substantially more evidence of progress" even if the data over "the past three months showed a welcome reduction", where a "few" favoured a 50bp (basis point) hike, "some" seeing likelihood of a recession this year as "elevated", and "uncertainty associated with their outlooks for economic activity, the labour market, and inflation was high".

As for central bank speak, the Federal Reserve's (Fed) Williams reiterated their commitment to restoring price stability. More are scheduled to speak before the end of this week, and there's pricing data to contend with tomorrow out of the US with PCE (Personal Consumption Expenditures).

As for today, preliminary fourth quarter GDP (Gross Domestic Product) and the weekly claims. There wasn't a lot to digest in terms of US economic data yesterday with the weekly mortgage applications down 13.3% after suffering a -7.7% print last time around and API's inventory readings showing a sizable build for oil.

As for Treasury yields, they finished the session lower and in real terms for most. Breakeven inflation rates fell back a bit, and CME's FedWatch showed probabilities firming a bit to the upside, with two more 25bp rate hikes priced in over their next two meetings, and by a majority reaching the peak range of 5.25-5.5% thereafter.

Gold Technical analysis, overview, strategies, and levels

We failed to get a play in yesterday’s session with the intraday highs and lows within its previous daily 1st levels, and although historically usually experiencing higher volatility at these levels has been relatively calm instead. Key technical indicators are bearish where they aren’t neutral, and the technical overviews are more bearish when it comes to other precious metals that suffered larger losses in yesterday’s session.

IG client* and CoT** sentiment for gold

As for sentiment, retail trader buy bias was already in heavy long territory at 72% yesterday, and price drops usually result in that bias rising on short positions taking profit and longs initiating. Such is the case with retail sentiment rising to 75% as of this morning, and not far off the net positions from the latest CoT report release**.

Gold chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, but it has been delayed, and in turn outer circle represents positions as of January 24, inner circle as of January 17.