Gold price trades on a negative note, eyes on Fedspeak
|- Gold price loses ground in Monday’s Asian session.
- The lower bets on the Fed rate cuts weigh on the precious metal.
- Fed’s Jefferson and Mester are set to speak later on Monday.
Gold price (XAU/USD) trades on a negative note on Monday during the Asian session. The hawkish remarks from the Federal Reserve (Fed) and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower. However, signs of economic weakness and ongoing geopolitical tensions in the Middle East are likely to support precious metals in the near term.
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Gold traders will keep an eye on the Fed’s Jefferson and Mester speeches on Monday. Later this week, the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales will be in the spotlight. In case of stronger-than-expected economic data, this might dampen the hope for a Fed rate cut and exert some selling pressure on the XAU/USD
Daily Digest Market Movers: Gold price attracts some sellers amid the Fed’s hawkish stance
- San Francisco Fed President Mary Daly highlighted the need for prolonged restrictive policy to achieve the Fed's inflation targets.
- Atlanta Fed President Raphael Bostic said that the central bank is probably still planning to cut its interest rates this year, despite the uncertain outlook.
- Dallas Fed President Lorie Logan said that there are upside risks to inflation, adding that it is too soon to cut interest rates.
- Minneapolis Fed President Neel Kashkari stated that he's in a "wait-and-see mode,” and there is a "high" bar to concluding that higher rates are needed to cool inflation.
- The Israeli military said that it launched operations in northern Gaza overnight and that "precise operations" are ongoing in eastern Rafah and near the Rafah border, as well as in the Zeitoun neighborhood in central Gaza. The military engagement in Rafah occurs before a full-scale invasion, per CNN.
- The initial reading of the Michigan Consumer Sentiment Index dropped to 67.4 in May from 77.2 in April, weaker than the expectation of 76.0.
- The University of Michigan's (UoM) one-year inflation outlook jumped to 3.5%, while the five-year outlook rose to 3.1%. Both figures registered the highest level since November 2023.
Technical Analysis: Gold price keeps the constructive picture unchanged
The gold price edges lower on the day. Nonetheless, the bullish stance of the yellow metal remains intact as it holds above the key 100-day Exponential Moving Average (EMA) on the four-hour chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI) which stands in bullish territory around 63.50, suggesting the further upside looks favorable.
The first upside barrier for XAU/USD will emerge near a high of May 10, $2,378, en route to the $2,400 psychological level. A decisive break above this level could clear the path for a rally to the next major resistance near an all-time high near $2,432, and then the $2,500 figure.
On the downside, the key support level is seen near the confluence of the resistance-turned-support level and the 100-period EMA at $2,325. Further south, the next contention level is located near a low of May 2 at $2,281.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.03% | -0.08% | 0.03% | 0.04% | 0.01% | 0.16% | -0.01% | |
| EUR | 0.04% | -0.04% | 0.08% | 0.08% | 0.05% | 0.21% | 0.04% | |
| GBP | 0.08% | 0.05% | 0.13% | 0.12% | 0.10% | 0.24% | 0.08% | |
| CAD | -0.03% | -0.07% | -0.12% | 0.00% | -0.03% | 0.13% | -0.04% | |
| AUD | -0.05% | -0.08% | -0.13% | 0.00% | -0.03% | 0.13% | -0.05% | |
| JPY | -0.01% | -0.04% | -0.09% | 0.04% | 0.04% | 0.14% | -0.01% | |
| NZD | -0.16% | -0.21% | -0.26% | -0.13% | -0.13% | -0.17% | -0.18% | |
| CHF | 0.00% | -0.03% | -0.08% | 0.05% | 0.04% | 0.01% | 0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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