- Weak US durable goods orders data failed to spur gold’s rebound as traders await Fed minutes.
- XAU/USD was last down more than .0.5% towards around $1845/50, with bears looking for a retest of the 200 DMA.
Although weaker-than-expected US durable goods orders data for April sent US long-term yields to new monthly lows, reflecting growing concerns over the current health of the US economy, this It hasn’t been enough to get gold back into positive territory on the day.
The pair XAU/USD continues to post losses of more than 0.5% daily and hovers around $1,850 as the US dollar hangs on to gains ahead of upcoming comments from Federal Reserve Vice Chair Lael Brainard and the release of Federal Reserve May meeting minutes later in the day.
The US dollar has weakened in recent sessions, with the DXY retracing from yearly highs above 105.00 to current levels around 102.50, reflecting position adjustment after a period of prolonged US dollar outperformance, as well as the recent decline in US long-term yields. This has facilitated a bounce in gold from below $1,800 levels to $1,850.
However, the message from Fed policymakers in recent weeks has remained resolutely aggressive. The debate right now revolves around whether the Federal Reserve will be able to pause interest rate hikes when it hits a neutral level and how far it might need to raise rates beyond that level. The debate does not end around the need to raise rates back to neutral levels, which means that the bank is on autopilot to make many more adjustments this year, including two 50 basis point moves in the next two meetings. .
As a result, many strategists suspect that the dollar’s recent weakness is likely to be short-lived, suggesting that XAU/USD may not be able to hold the $1850 levels for long. If the Fed’s words and actions today provoke a hawkish reaction in the market, traders should watch for gold to rally again. test its 200 day moving average around the $1840 levels.
Technical Levels
Source: Fx Street
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