Gold clocks fresh 10-month low as 2-yr T-yield spikes

The hawkish Fed ‘dot plot’ chart pushed the 2-year treasury yield higher by five basis points. This reduces the incentive to hold the yellow metal.

Thus, gold prices dropped to a fresh 10-month low of $1148.68/Oz levels.

Fed raised rates by 25 basis points as widely expected, however, the central bank sees 3 rate hikes in 2017 as opposed to the previous forecast of 2 rate hikes.

Furthermore, the central bank sees little scope for further improvement in the labor market, which means heightened odds of a steeper rate hike path if the inflation expectations continue to rise. Further action in the metal depends on what Yellen offers during her press conference, due a few minutes from now.

Gold Technical Levels

The metal was last seen trading around $1152/Oz levels. A breakdown of support at $1130.33 (Oct 2015 low) would expose the key psychological level of $1200. On the higher side, only a break above the weekly high of $1165.81 could yield a re-test of $1188.10 (Dec 5 high).