- Gold price hits resistance at 50-day EMA of $1976.47, retraces as US Congress and the White House fail to progress on fiscal talks.
- US Dollar Index (DXY) advances 0.25% amid the stalemate, rising above its 200-day EMA for the first time since March 15, 2023, as XAU/USD slips.
- Traders await the release of the US Federal Reserve Open Market Committee (FOMC) minutes after a dovish rate hike in May.
Gold price faces solid resistance at the 50-day Exponential Moving Average (EMA) at $1976.47, retraces some of its earlier gains after hitting a daily high of $1985.27. Talks between the US Congress and the White House (WH) failed to provide any relief; hence market participants are triggering toward safe-haven assets, not being Gold one of them. At the time of writing, XAU/USD is trading at $1969.20, down by 0.20%.
Political uncertainty triggers flows toward safety, bolstering the US Dollar
Wall Street continues to print losses as sentiment remains dented by the political uncertainty in the United States (US). Several reports on Tuesday updated that talks between President Biden and US House Speaker McCarthy did not make much progress. Divisions are seen in spending cuts proposed by the Republicans, while the White House is pushing for more taxes as part of the agreement.
Recently, US Treasury Secretary Janet Yellen said that “It is hard to be precise exactly which day we will run out of resources,” on Wednesday, as reported by Reuters. The former Fed Chair Yellen added that her office would try to increase the level of precision on the date the US Government will rule out of money.
Before Wall Street opened, XAU/USD rallied towards its daily high above $1985 just to see those gains evaporate as the greenback is staging a comeback, propelled by US bond yields. US real yields are climbing, standing at 1.449%, as shown by Treasury Inflation-Protected Securities (TIPS), while the 10-year benchmark note yields 3.709%, up one bps.
In the meantime, the US Dollar Index (DXY), a gauge of the buck’s value against a basket of its rivals, advance 0.25%, up at 103.776, above its 200-day Exponential Moving Average (EMA) for the first time since March 15, 2023.
XAU/USD traders will focus on the release of the US Federal Reserve Open Market Committee (FOMC) minutes at around 18:00 GMT, where the Federal Reserve (Fed) delivered a dovish rate hike of 25 basis points (bps) at its May 2-3 meeting. Traders would scrutinize the minutes, looking for clues about Fed Chair Jerome Powell and Co’s forward path.
XAU/USD Price Analysis: Technical outlook
XAU/USD is still neutral-biased, though a daily close below the 50-day Exponential Moving Average (EMA) can open the door for further weakness. However, sellers are still pending from breaking below the $1950 psychological level, tested three times in the last five trading days, with Gold sellers unable to drag prices toward the 100-day EMA at $1933.84. In that outcome, the next support would be the $1900 mark. Otherwise, Gold’s daily close above $1977 will keep buyers hopeful of a re-test of the $2000 figure.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.