Gold could struggle amid expectations of more policy tightening

Gold is trading around $1751 per ounce at the time of writing versus the previous closing price; $1754.18 The US dollar’s weakness has helped gold price to test $1,780 per ounce. On the other hand, the Fed’s commitment to fight inflation with tighter monetary policy leaves space for future dollar’s gains.

Softer than expected inflation in the US triggered the latest dollar selloffs, pushing gold higher. However, inflation is still above the central bank’s target range of 2%. This leaves a chance for more tightening until inflation slows significantly.

US benchmark yields are rising and likely to move higher given the view of another 100 bps rate hike by the Fed. Investment demand is stabilizing, with slowing ETF outflows and covering of short positions.”

It is worth noting that the physical demand for Gold is weakening, though central bank purchases remain strong.