• Some follow-through USD buying dragged gold prices lower for the second straight day on Thursday.
  • Recession fears continued weighing on investors’ sentiment and could lend support to the XAU/USD.
  • Traders look forward to the US GDP report and other macro releases for some meaningful impetus.

Gold extended the overnight retracement slide from over a two-week high and witnessed selling for the second successive day on Thursday. The XAUUSD remained depressed through the early European session and was last seen trading just above the very important 200-day SMA support near the $1,840 region.

Minutes from the May 3-4 FOMC meeting showed that most participants believed a 50 bps rate increase would likely be appropriate in June and July. Apart from this, the worsening global economic outlook benefitted the US dollar's status as the global reserve currency, which, in turn, undermined demand for the dollar-denominated gold.

The downside, however, seems cushioned amid a generally weaker tone around the equity markets, which tends to benefit the safe-haven gold. The prospects for a more aggressive move by major central banks to constrain inflation, along with the Russia-Ukraine war, have been fueling recession fears and continued weighing on investors' sentiment.

The anti-risk flow was reinforced by the recent decline in the US Treasury bond yields. This might hold back the USD bulls from placing aggressive bets and further lend some support to the non-yielding gold. Hence, it will be prudent to wait for strong follow-through selling before positioning for the resumption of the prior descending trend.

Market participants now look forward to the US economic docket - featuring the release of the Prelim Q1 GDP, the usual Weekly Initial Jobless Claims and Pending Home Sales. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around gold.

Technical levels to watch

XAU/USD

Overview
Today last price 1846.93
Today Daily Change -6.53
Today Daily Change % -0.35
Today daily open 1853.46
 
Trends
Daily SMA20 1853.08
Daily SMA50 1904.01
Daily SMA100 1885.84
Daily SMA200 1839.21
 
Levels
Previous Daily High 1868.13
Previous Daily Low 1840.85
Previous Weekly High 1849.45
Previous Weekly Low 1786.94
Previous Monthly High 1998.43
Previous Monthly Low 1872.24
Daily Fibonacci 38.2% 1851.27
Daily Fibonacci 61.8% 1857.71
Daily Pivot Point S1 1840.16
Daily Pivot Point S2 1826.87
Daily Pivot Point S3 1812.88
Daily Pivot Point R1 1867.44
Daily Pivot Point R2 1881.43
Daily Pivot Point R3 1894.72

 

 

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