- Gold snaps five-day uptrend, retreats from 12-day top.
- US dollar pares recent losses around monthly low as yields probe three-week-long south-run.
- Covid, geopolitical headlines renew the US dollar’s safe-haven demand even as downbeat data test the greenback bulls.
- FOMC Minutes, Durable Goods Orders and ECBSpeak are the key catalysts for near-term clear directions.
Gold Price (XAU/USD) prints the first daily loss in five as the quote drops to the intraday low of around $1,860 during Wednesday’s Asian session. The metal’s latest weakness could be linked to the US dollar’s rebound from a monthly low ahead of the key data/events.
That said, the US Dollar Index (DXY) rises 0.21% as it recovered from a four-week low eye to regain the 102.00 threshold. The DXY rebound could be linked to the risk-negative headlines from China and South Korea, as well as the market’s preparations for the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior, as well as the Federal Open Market Committee (FOMC) Minutes.
North Korea’s firing of three missiles and Japan’s dislike for the same join the market’s anxiety ahead of today’s Fed Minutes and seem to also weigh on the market’s optimism. On the same line could be the news updating China’s covid lockdowns and their negative impacts on the world’s second-largest economy. “Beijing has continued its quarantine to end its month-old COVID outbreak, while in Shanghai, authorities plan to keep most restrictions in place this month, before a more complete lifting of the two-month-old lockdown from June 1,” said Bloomberg.
While portraying the mood, the S&P 500 Futures pare the early-day gains around 3,955, up 0.40% intraday, whereas the US 10-year Treasury yields stay defensive around one-month low, at 2.76% by the press time.
On Tuesday, downbeat prints of the US housing data and repeated Fedspeak, in contrast to the hawkish comments from the ECB, exerted downside pressure on the US Treasury yields and the US Dollar.
Looking forward, gold prices are likely to bear the burden of the US dollar rebound. However, any more bearish signals from the FOMC Minutes and/or downbeat US data will allow the precious metal to pare recent losses.
Technical analysis
Gold Price stays pressured inside a weekly bullish channel, recently tracking RSI (14) as it retreats.
Given the RSI pullback from the overbought territory, coupled with the failure to cross the 38.2% Fibonacci retracement (Fibo.) of the April 18 to May 16 downturn, XAU/USD is likely to decline further.
However, a convergence of the aforementioned channel’s support and the 100-SMA, around $1,848, appears a tough nut to crack for the gold sellers.
In a case where gold drops below $1,848, a south-run towards the $1,800 threshold will precede the bear’s intention to refresh the monthly low, around $1,787 by the press time, which can’t be ruled out.
On the contrary, the resistance line of the stated channel, at $1,878 by the press time, will test the XAU/USD bulls should they cross the 38.2% Fibo. near $1,867.
Even so, a confluence of the 200-SMA and 50% Fibonacci retracement level, close to $1,892, will challenge the metal’s further upside.
Gold: Four-hour chart
Trend: Further weakness expected
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