Gold Intermarket: dominant forces pressuring gold below key technical level

Gold has been in a daily decline since the 16th April with a pause here and there in the dominant down trend as markets weigh up the chances of a Fed hike in June and the political risks from around the world. 

• FED's Rosengren: U.S. unemployment drop below 4 pct would overheat economy, prompt higher rates
• Fed's George: Falling jobless rate means adjusting monetary policy is of 'paramount importance'
• US: Atlanta Fed's GDP forecast for Q2 at 3.6% on May 9, down from 4.2% on May 4.

For the time being, the broader tone is dominant again in the Fed, with around odds of 80% of a further rate hike coming as soon as next month, supporting the dollar and fuelling positive sentiment on Wall Street today. Subsequently, both the NASDAQ and S&P 500 making fresh record highs and the VIX remains at 23-year lows as well. With the French elections providing a pro-globalist outcome for markets, they are relieved and risk appetite has increased forcing the yen lower above the 114 handle and EUR/JPY to trade above 124.00. 

• US Dollar: Bulls catch their breath above 99

Gold levels

All of this does not bode well for gold in the immediate term that has broken a technical level in the smoothed 200 sma at 1,262.75 which has opened up a break of 1,200 and reveals the Feb lows of 1,194.83 as a downside risk. This would reverse the Dec 2016 rally from 1122.43 by over 50%.