Gold eyes fresh 3-week lows amid Fed rate hike talk

Friday’s rebound turned out to be a dead cat bounce as gold fell back to $1224.60 on Monday and extended losses to $1223.90 in the Asian session today.

A break below Friday’s low of $1227.70 would mean fresh three-week lows for the metal.

Tracks Fed rate hike bets

The metal’s retreat from the recent high of $1263.87 is largely due to sudden and sharp rise in the March Fed rate hike bets. Moreover, two weeks ago no one expected Fed to raise rates in March.

However, hawkish talk from Yellen & Co. boosted rate hike odds to 90%. No wonder, the metal fell from $1263.87 (Feb 27 high) to $1222.70 (Friday’s low).

The yellow metal faces the risk of further losses if Friday’s US wage growth numbers better estimates.

Gold Technical Levels

The daily chart shows bullish crossover between 50-DMA and 100-DMA, a lagging indicator. A breakdown of support at $1222.70 (Friday’s low) would expose $1210.52 (50-DMA) and $1200 (zero figure). On the other hand, a break above $1226.32 (Feb 21 low) would expose $1233.89 (5-DMA) and $1241.40 (10-DMA).