Gold may have finally run out of steam

It’s been an impressive rally in gold over the last week in particular but it ran into a brick wall on Tuesday as Fed Chair Jerome Powell and FOMC voter James Bullard delivered a sprinkling of reality to investors.

The message was much less dovish than traders had taken away from the meeting last week – not by accident I’m sure – prompting a bounce in the dollar which in turn weighed on gold.

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Gold Daily Chart

Interestingly, the rebound hasn’t been particularly strong and interest rate expectations haven’t adjusted too considerable which suggests markets remain engaged in a game of bluff with the Fed.

The rebound did occur around past resistance in gold – $1,440 – so perhaps the timing was convenient. The first test of support may come around $1,400.

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