Gold has been on a downtrend since early May, despite the USD being soft as well. The price slipped below $1,900 late last week, but the decline in t
Gold has been on a downtrend since early May, despite the USD being soft as well. The price slipped below $1,900 late last week, but the decline in the US PCE core price index on Thursday and which was confirmed by softer GDP price revisions for Q1 turned the sentiment positive for most other assets apart from the USD which turned bearish and has been slipping lower since then.
Although, the upside price action might have reached the limit, as shown by the H4 chart above. Yesterday Gold prices continued to recover, benefiting from the weakened US Dollar. However, as the US session started, Gold prices stopped climbing higher due to limited liquidity. The 100 SMA (green) was standing above ready to provide resistance as well, so GOLD closed the day with little gains after a slight retreat.
Traders remain cautious, especially with the upcoming release of the FOMC minutes which are scheduled for later today, and Non-Farm Payrolls (NFP) later this week. Despite the increased probability of a 25 basis points hike from the Federal Reserve in July, the recent rally in Gold prices remains unaffected. The DOT PLOT from last month’s meeting when the FED held interest rates unchanged at 5.25%, showed two more hikes until the end of the year. But, now after the recent data markets are not so certain.
Currently, the market is pricing in an 86.2% likelihood of a 25 basis points rate hike at the July 26 meeting, which is higher compared to 53.5% a month ago and 76% a week ago. Alongside the increased rate hike probabilities, there has been growing concern about a potential recession, reflected in the dismal manufacturing data over the past week. This concern could partly explain the resurgence in Gold prices, following a brief dip below the psychological level of $1,900. But, the minutes are a bit outdated since the FED left the policy at the performance economic data, which has been showing weakness since then.
GOLD
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