Gold looks for support levels after hawkish Fed comments

New York (Feb 11)  Gold has been having a good run in recent sessions but the yellow metal hit a roadblock last night when some Fed comments pushed money market expectations higher. Fed's Bullard said he now favors a 100bps interest rate increase by July 1st and 50bps in March. Adding fuel to the fire Fed's Barkin says he would have to be convinced of a 'screaming need' for a 50bp hike. Barkin also added he is awaiting the data by the time we get to March and the US economy will pass pre-covid in Q1 2022. This led the U.S. 2 year yield to rise as traders began to anticipate more aggressive or higher rate increases.

The 1-hour chart below shows the impact on the yellow metal. The price hit $1843.3/oz and then crashed down to a wave low of $1821.1/oz overnight. This then leads us to look at the closest support and resistance levels. The zone marked in orange is a high volume node but also an area of interest in the past. The price has bounced off the zone three times and it could be used as a support level once again. Below that, the green area looks slightly stronger. It is also closer to the psychological $1800/oz area which has been a magnet for the price for a very long time now

On the upside, the volume point of control (VPOC) is the red horizontal line. This is the point on the chart where most contracts have changed hands. This is the area the price rejected and the bulls would do a good job getting the gold price above the zone this afternoon. The back line is a low volume node and the previous consolidation low. This for me looks like an important short-term resistance and any test should be watched. All in all, although the price has been in an upward trajectory the comments clearly shifted the sentiment. In the afternoon the support levels could be in focus.

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