GOLD DOWN 2% ON WEEK AND UNDER $1800 AS FED BITES LONGS

COMEX CALL: SELL XAUUSD BELOW 1791 TARGET 1781 STOPLOSS 1796
The two-week long party in gold has proven to be exactly that: two weeks long. Bulls in the precious metal trying to hold on the $1,800 handle and reach for $1,900 next saw their hopes dashed by a Federal Reserve that took a big bite out of the gold market with its super-hawkish monetary policy to wade the U.S. out of the worst inflation crisis in decades. “The $1,800 level was a key support level for gold, so momentum selling has the potential to make this an interesting trade,” said Ed Moya, analyst at online trading platform OANDA. “If it gets ugly quickly and $1760 breaks, gold may not see much support until $1720.” Gold futures’ most active contract on New York’s Comex, April, settled down $8.40, or 0.5%, at $1,778.80 an ounce. Over the past two sessions, the benchmark gold futures contract fell just shy of $60 in total. That handed the contract a weekly loss of more than 2%, virtually wiping out the back-to-back gains of the past two weeks. The Federal Reserve unveiled this week a new hawkish era for U.S. monetary policy, with Chairman Jerome Powell not discounting the possibility that U.S. interest rates might go up every month this year after the first pandemic-era hike is in, possibly in March.            The Fed dropped interest rates to virtually zero after the Covid-19 outbreak of March 2020, and kept them for over 20 months. Powell and other central bank officials say a series of rate hikes will be needed now to curb price pressures ramping up as a result of the trillions of dollars of pandemic relief spending and supply chain disruptions caused by the crisis. Gold has always been branded as a hedge against inflation while rate hikes are typically negative for the yellow metal. But even prior to its January run, gold has had trouble living up to its billing as an inflation hedge as the Dollar Index and U.S. Treasury yields often spiked in anticipation of rate hikes.That appeared to initially change when the yellow metal broke past the $1,835 resistance more last week and managed to hover around there.“The breakout above $1,850 was actually a fake-out scripted by the bears in the backdrop of Fed’s hawkish tone that turned tables on the bulls, pushing gold down to $1,791,”