Gold gained after Fed Chair Jerome Powell indicated the Fed will slow the pace of interest rate increases next month. Nevertheless, strategists at TD Securities expect the yellow metal to drift lower into the first quarter of next year.

Still considerable risks that policy keeps on tightening

“Fed Chair Powell signaled the Federal Reserve will slow the pace of interest-rate increases next month, but this does not mean rates will not go past 5%. However, market pricing of the terminal rate is now just under 5%.”

“The confirmation of a slower pace of tightening prompted the market to go bid for Gold. Still, given that inflation will be a problem for some time  suggests that even though the rate of tightening may moderate, there are still considerable risks that policy keeps on tightening.”

“Current price action may be the result of the last short positions being covered. We still expect Gold will trend lower into Q1-23.”

See – Gold Price Forecast: Miles to go before XAU/USD shows a sustained shine – TDS