Gold Price has slumped to the $1,850 level. Strategists at TD Securities note that the demand for the yellow metal is waning ahead of Wednesday’s Federal Reserve meeting.

Gold bugs are staring down the barrel of a hawkish Fed

“As the massive demand impulse for gold associated with the war in Ukraine runs out of steam, prices are collapsing.”

“Shanghai traders are liquidating their gold length at a fast clip, removing a major pillar of support for demand. Indeed, our tracking of the top SHFE traders' net length highlights continued and substantial liquidations from this cohort, as lockdowns impact jewelry sales.”

“Gold bugs are staring down the barrel of a hawkish Fed, with this week's FOMC likely to feature a 50bp hike and the start of quantitative tightening, which in turn drives liquidity risk premia for all asset prices.” 

“The bar is low for additional outflows in the yellow metal, but tomorrow's knee-jerk reaction may also whipsaw traders with the Fed's move well telegraphed, notwithstanding the elevated anxiety levels.”