Gold Bottoming Despite Fed

June 19, 2023

by Adam Hamilton Zeal LLC

Gold’s recent pullback looks to be bottoming, despite ongoing aggressive Fed hawkishness. In recent weeks the yellow metal has consolidated high, defying aggressive Fedspeak, another big US-jobs upside surprise, and hawkish rate forecasts from top Fed officials. This resilience leading right into gold’s major summer-doldrums seasonal low coincides with speculators maintaining really-bullish gold-futures positioning.

Gold was enjoying a strong upleg into early May, powering an impressive 26.3% higher in 7.2 months. But after rapidly surging to $2,050 and challenging all-time-record nominal highs, gold was really getting stretched. Trading way up at 1.132x its 200-day moving average, gold was very overbought. While still under the upleg-slaying danger zone over 1.160x, a healthy pullback was in order to rebalance sentiment.