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XAU/USD remains vulnerable amid stronger dollar and rates

September 20, 2022

NEW YORK (Sept 20) The price of gold is back in the red zone ahead of the FOMC meeting. Strategists at TD Securities expect the yellow metal to remain under downside pressure.

Precious metals could fall further

“A stronger dollar and rates continue to weigh on the precious metal complex with the FOMC on the horizon.”

“Aggressive Fed expectations are being priced in, the persistence of inflation continues to support an aggressive effort by the Fed, and we now expect the FOMC to raise the target rate by 75 bps at its meeting next week, deliver another 75 bps hike in November, and hike a further 50 bps in December.” 

“We see the potential for continued outflows from money managers and ETF holdings to weigh on prices, which ultimately raises the probability of a pending capitulation from the small number of family offices and proprietary trading shops who hold complacent length in gold.” 

“While prices are certainly weak, precious metals' price action could still have further to fall as the restrictive rates regime is set to last for longer.”


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