Gold remains flat lined despite NKorea missile test, drop in Fed rate hike odds

Omkar Godbole FXStreet Contributor

Gold is having a hard time pushing through $1229.51 (38.2% Fib of Dec low - Apr high) despite the drop in the June Fed rate hike odds and continuing tensions in the Korean peninsula.

North Korea fired a ballistic missile that landed in the sea near Russia on Sunday. The United Nations Security Council is due to meet on Tuesday to discuss the launch.

Meanwhile, the disappointing US retail sales and CPI number released on Friday forced the investors to reconsider the June rate hike. Consequently, the probability of a 25 basis point hike in June dropped from 83% to 73.8%.

However, the metal is neither responding to the drop in the Fed rate hike odds, nor to the heightened geopolitical tensions. Moreover, the Asian equities are enjoying a moderate risk-on trading and that could be capping the uptick in the safe haven metal.

Focus on China data

China retail sales are seen rising 10.6% y/y in April compared to the February figure of 10.9%. Industrial production is seen rising 7.1% y/y, which would be well below the previous month’s figure of 4.6%. Better-than-expected China data could yield a drop in the yellow metal.

Gold Technicals

The metal was last seen trading around $1229/Oz levels. The RSI on the 4-hour chart has moved above 50.00, while the daily RSI struggles to extend the recovery from the oversold region.

A convincing break above $1129.51 (38.2% Fib + 4-hour 50-MA) would open up upside towards $1241.26 (May 4 high) and $1250 (50-DMA + 200-DMA). On the lower side, breach of the session low of $1226 could yield a sell-off to $1217.17 (May 11 low) and $1214.40 (May 9 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Shrinking
1H	Bullish	Neutral	Low
4H	Bullish	Overbought	Expanding
1D	Bullish	Neutral	Shrinking
1W	Strongly Bearish	Neutral	Shrinking
Updated May 15, 01:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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