Fed's Hawkish Stance Drives Gold to Its Worst Quarterly Drop

• • A clear distribution structure on the chart, with price slipping from a key equilibrium buffer.
• • The Fed's firm stance on rates is pushing gold toward a fourth straight monthly loss.

Gold is under pressure again from the direction of Fed policy. Hawkish comments from Fed Chair Kevin Warsh shut the door on rate cuts and even raised the prospect of more hikes next quarter. The result: gold is down nearly 25% over four months, one of its worst stretches on record. On the chart the structure is clearly distribution — price fell out of balance and now sits at $4020. As long as government bond yields stay high, the case for holding gold keeps thinning. The next downside target is $3950; if that breaks, $3900 is realistic this week.

Gold is very sensitive to US labor data. If the data disappoints and price bounces past $4080, the bearish case is off.