PRESS ROOM
The prospect of peak hawkishness from central banks may be easing the headwinds for precious metals
Thursday 13th October '22
The Federal Reserve (Fed) delivered its third back-to-back 75 basis point rate increase in September. This maintained the upward pressure on the US dollar and Treasury yields, and downward pressure on gold. But even though the US is expected to keep tightening policy in the near term and do so at a faster pace than other major economies, the notion of peak hawkishness from the Fed is beginning to enter the market discourse. Peak hawkishness could be a prelude to an eventual dovish pivot from the central bank. Based on this emerging sentiment, gold bounced back in the last week of September and the first week of October. Gold’s net speculative positioning, a measure of sentiment, remains meaningfully subdued and is hovering around 2 standard deviations below the preceding 5-year average. This means that there is significant potential for sentiment to lift gold as the upward pressure on dollar and Treasuries eases.