By Barani Krishnan
Investing.com — Is gold safe at $1,700? It’s a valid question, given how much south the yellow metal has gone in just two days.
on New York’s Comex settled Wednesday’s trade down $27.40, or 1.6%, at $1,736.0 an ounce. The session low was $1,730.95.
Gold’s latest nadir leaves a cushion of barely $30 from the next nightmarish situation for longs in the game — $1,600 territory.
“Inability to breach $1,768 will keep gold under pressure aiming to push towards $1,722-$1,698,” said Sunil Kumar Dixit, chief technical strategist at skcharting.com.
A one-two punch by a resurgent dollar and a hawkish Federal Reserve has basically landed gold at September 2021 lows.
The , which pits the dollar against six major currencies, leapt 1.5% to above 107 points on Wednesday, its highest since December 2002. The dollar has rallied with few stops since November last year on bets of aggressiveby the Federal Reserve, which has just started delivering on those expectations.
Gold’s malaise also comes amid the Fed’s non-stop chatter about rate hikes. Bullion bulls have been wounded for weeks by the Fed’s rate cudgel as policy-makers at the central bank showed no backing down in their aim to tame the inflation beast by doubling the Fed funds rate before the end of the year.
The Fed believes there is a real danger of high becoming entrenched in the US economy and that appropriate interest rate hikes would be the only way to balance runaway prices with growth, according to from the central bank’s policy meeting held last month.
The Fed left rates at between zero and 0.25% for two years during the pandemic and only raised them this year in March. It has since taken rates to between . The central bank has said it will continue with rate hikes until inflation, running at 40-year highs of more than 8% per annum, returns to its target of 2% per year.
The Fed is expected to push ahead with another three-quarter percentage point hike this month.