The Fed did not want to scare the financial markets so much by withdrawing monetary stimulus that its movement in this direction at a snail's pace led to paradoxical discrepancies. If in 2013 Ben Bernanke's announcement on tapering QE provoked a sharp increase in Treasury bond yields, now real debt rates have collapsed to a record low on the eve of the FOMC meeting, at which the issues of reducing the scale of asset purchases will be discussed.

Theoretically, the historical lows of real bond yields should stimulate demand for other assets, because in this situation it becomes unprofitable to keep debt securities in portfolios. Pension funds and insurance organizations are the first to suffer. In the old days, the fall in real debt rates led to an increase in stock indices and gold. Today, the S&P 500 really does not get tired of setting new records, but investors keep precious metals in the black. In January-June, the outflow of capital from American and European ETFs focused on gold reached $8.5 billion and $3.6 billion. Yes, Asian funds have registered a net inflow of $1.6 billion, but when the precious metal flows from West to East, expect trouble. In other words, a "bearish" trend.

Dynamics of real yields on US bonds

One of the reasons for the fall in US Treasury bond yields is the rejection of previous positions. At the beginning of the year, expectations of rapid economic growth, accelerating inflation, and a passive Fed allowed investors to sell debt obligations. However, at present, everything has turned upside down: there are rumors on the market that the best for the global economy is over, the recovery has passed its peak and is entering the stage of maturity, and the Federal Reserve is ready to raise rates in 2022. Reflation trading has stopped working, bond shorts are closing, their yield is falling.

Gold is under pressure due to expectations of the withdrawal of monetary stimulus, as it was in 2013. The normalization of monetary policy by the Fed is a bullish factor for the USD index, and the precious metal is traditionally perceived as an anti-dollar, as it is quoted in the US currency. In this regard, the consolidation of XAU/USD ahead of the FOMC meeting on July 27-28 looks logical.

Will Jerome Powell and his colleagues want to return to the patience policy they followed for most of the year until mid-June? Or does the Fed believe that the Delta variant will not harm the US economy and can continue to move along the path of monetary restriction? In the first case, the US dollar will fall into a wave of sales, and gold will shine anew; in the second, the precious metal will be forced to continue its downward campaign.

Technically, there is a consolidation in the range of $1,790 - $1,815 per ounce on the daily chart of gold, which corresponds to the 23.6% and 38.2% Fibonacci levels from the CD wave of the red Shark pattern. A breakdown of the lower border of the trading channel will be a signal for selling with targets at $1,760 and $1,720. On the contrary, a confident assault on the resistance at $1,815 will allow opening long positions in the direction of $1,830 and $1,850 per ounce.

Gold, Daily chart