GOLD price dipped slightly during the Asian session on Wednesday, retracing some of the previous day’s modest gains to hover around the $1,924-$1,923
GOLD price dipped slightly during the Asian session on Wednesday, retracing some of the previous day’s modest gains to hover around the $1,924-$1,923 range. Market focus remains on the upcoming release of the Federal Reserve’s (Fed) June FOMC meeting minutes, as investors seek insights into the central bank’s monetary policy outlook.
Fed’s Rate-Hike Path in the Spotlight
The Fed’s indication of a potential 50 basis points interest rate hike before year-end during the June policy meeting has drawn attention. However, recent macro data from the United States, including eased inflation pressures and contraction in the manufacturing sector, have raised questions about the feasibility of further tightening monetary policy. Traders eagerly await the meeting minutes for clues about the Fed’s future rate-hike trajectory, which will have a significant impact on the direction of non-yielding gold.
Hawkish Central Banks and US-China Tensions Weigh on Gold
Expectations of a 25-basis point rate hike at the upcoming FOMC meeting in July continue to support elevated US Treasury bond yields, bolstering the US Dollar and exerting downward pressure on the gold price. Additionally, a hawkish stance from other major central banks further limits upward momentum for XAU/USD. However, concerns about a global economic downturn, particularly in China, contribute to the safe-haven appeal of gold, mitigating deeper losses. The recent deterioration in US-China trade relations, exemplified by China’s restrictions on key metals used in high-tech industries, could also help prevent significant declines in the gold price.
Technical Outlook for Gold Price
From a technical standpoint, the $1,931 area remains a crucial resistance level, followed by the 100-day Simple Moving Average (SMA) around $1,942. A sustained break above this level could trigger a short-covering rally, pushing the gold price towards the $1,962-$1,964 zone and potentially testing the $1,970-$1,972 supply zone.
Conversely, support is anticipated near the $1,908-$1,907 region, with further levels at the $1,900 psychological mark and the multi-month low around $1,893-$1,892. A decisive break below these levels could expose the important 200-day SMA around $1,860.
In summary, GOLD prices are influenced by various factors such as the Fed’s rate-hike path, hawkish central banks, US-China tensions, and technical levels. Traders await the June FOMC meeting minutes for insights into future monetary policy decisions that could impact the gold market.
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