According to the minutes of the Fed's November meeting, most policymakers believe that a slower pace of interest rate hikes will soon be appropriate. Nonetheless, gold remains constrained by key resistance around $1786 and is now falling further back below $1750. There is no doubt that the $1730 is a key support level for gold in the near term, but it will be broken soon as the rally continues to be blocked. The reason is that although long-term U.S. Treasury Bond yields have resisted the 3.75%-4% federal funds rate, the market still expects the terminal rate to fix above 5%. It means that the Fed will still raise rates by more than 100 basis points in the coming months. In addition, the market is betting on inflation topping out and thus gold has been hampered by the fact that real yields are holding steady and cannot break out. Referring to the latest gold position data from the SPDR Gold Trust, the world's largest gold ETF fund, the latest net position has been significantly reduced compared to the beginning of this year. Also, the data shows that the net position on Nov 23rd was 906.93 tons, compared with 980.31 tons on Jan 5th. 

The U.S. Treasury Department released the TIC data for September on November 17th, 2022, indicating that in September this year, the total size of foreign investors holding U.S. Treasuries fell from $7,509 billion in August to $7,296.9 billion in September, the lowest level since June 2021. Moreover, it was sold off $212.1 billion in a single month, and gold will not reach the bottom until the risk of the U.S. Treasury market is lifted.

Several Fed officials announced hawkish signals in the early hours of last night, suggesting that interest rate hikes will continue in the next two years, warning that the market underestimated the odds of a rate hike next year, which depressed the market's optimistic sentiment. Historically, the topping of U.S. Treasury Bond yields is often seen before the last rate hike, while the trend of the USDX is more uncertain. Therefore, it is possible that the USDX will maintain the interest rates high, which will keep the USDX strong and thus suppresses gold. 

Regarding the daily chart, gold keeps falling after being stopped under 1786 USD. Meanwhile, gold fails to break the 2/1 Gann Fan, suggesting a growing retracement risk. If gold breaks below 1730 USD later, it is expected to test further below 1700 USD or even 1680 USD. 

Trading direction: Short

Entry price: 1750.00

Target price: 1700.00

Stop loss: 1786.00

Support: 1730.00/1700.00

Resistance: 1786.00/1803.00