Gold accelerates correction after FOMC minutes

  • USD appreciates after Fed’s minutes. 
  • Gold drops almost $10, remains clearly above $1300. 

The yellow metal pulled back further after the release of the minutes from the latest Fed meeting when the US central bank decided to raise rates by 25bp. Gold dropped from $1,315.80/oz to $1,307.25 hitting a fresh daily low. The side took place amid a rally of the greenback on the back of the minutes. 

According to the document, Fed officials discussed about the economic impact from tax cuts. The minutes showed that “several officials” were concern about low inflation expectations. The majority, however, expected inflation to rise to 2%. Most of the members backed gradual rate hikes. 

Despite correction, uptrend intact 

During the Asian session, gold reached $1,321 the highest level since mid-September. Afterward, it started to decline, making a correction. The metal is about to post the first decline since September 14. During the last minutes it moved off lows and it was hovering above $1,310. 

The pullback seems normal taking into account that it gained more than $60 from mid-December. The rally so far was capped by $1,320 but the overall tone remains bullish and it is likely to remain that way unless price retreats sharply under $1,300. 

 

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