Gold is currently consolidating after a significant rally. Short-term potential for higher prices seems limited without additional support from the dollar. The market remains robust, with a buy-on-dip mentality prevailing among investors.
Fed’s Stance on Rate Cuts
Minutes from the Fed’s May policy meeting are due at 18:00 GMT. Recent economic data indicates a downtrend in inflation, but Federal Reserve officials recommend waiting several more months before cutting rates. Higher interest rates increase the opportunity cost of holding gold, an asset traditionally viewed as an inflation hedge.
U.S. Treasury yields rose on Wednesday following comments from several Federal Reserve speakers. These officials emphasized patience, noting that inflation remains above the Fed’s 2% target. Fed Governor Christopher Waller stated the need for more data showing easing inflation and economic conditions before supporting rate cuts.
Market Reaction
Investors are currently adjusting their rate cut expectations, with markets pricing in about 43 basis points of easing compared to last week’s 52 basis points. The PCE data due on May 31 will be crucial for confirming inflation trends. As traders await further Fed guidance, the market outlook for gold remains constructive, supported by ongoing central bank buying and cautious optimism for continued economic stability.
Market Forecast
In the short term, gold prices are likely to remain under pressure as traders digest Fed minutes and economic data. However, the underlying demand from central banks and a potential easing of inflation could support a bullish outlook in the medium term. Traders should watch upcoming economic indicators and Fed comments closely for signs of policy shifts that could impact gold prices.
Silver price prints a fresh multi-year high at $30.50 amid firm speculation for Fed rate cuts.
The US Dollar falls back as investors see the Fed reducing interest rates from September.
Fed officials want to see more good inflation data to gain confidence that price pressures will return to the 2% target.
Silver price (XAG/USD) refreshes multi-year high at $30.50 in Friday’s New York session. The white metal strengthens on firm speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.
The confidence of investors for the Fed to begin lowering interest rates from September has strengthened as the United States Consumer Price Index (CPI) report for April has indicated that progress in the disinflation process has resumed after stalling in the January-March period. The scenario is favorable for non-yielding assets such as Silver but weighs on bond yields and the US Dollar.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats from the intraday high of 104.80.
In spite of an expected decline in the US inflation, Fed officials have maintained a hawkish guidance on interest rates. St. Louis Fed Bank President Loretta Mester said on Thursday inflation will take longer to reach the 2% target than what she previously thought.” She emphasized the need to accumulate more data to have a clearer picture of the inflation outlook.
Silver technical analysis
Silver price has posted a fresh multi-year high at $30.55. Earlier, Silver price recovers sharply after discovering buying interest near the horizontal support plotted from 14 April 2023 high around $26.09 on a daily timeframe. The above-mentioned support was earlier a major resistance for the Silver price bulls. The white metal is approaching the multi-year high at $29.80.
The near-term outlook of Silver has improved as it returns above the 20-period Exponential Moving Average (EMA), which trades around $28.10.
The 14-period Relative Strength Index (RSI) shifts into the bullish range of 60.00-80.00, suggesting that a bullish momentum has been triggered.
Gold price consolidates in a tight range above $2,400 early Wednesday, awaiting Fed Minutes.
The US Dollar steadies alongside US Treasury bond yields, as risk sentiment remains tepid.
Bullish RSI on the daily chart continues to keep Gold buyers hopeful.
Gold price is trading back and forth in a tight range above $2,400 early Wednesday, consolidating the previous losses. Gold traders await the Minutes of the US Federal Reserve (Fed) May policy meeting for fresh trading impetus.
Gold price defends $2,400, as Fed Minutes loom
Having kicked off the week on a positive, Gold price retreated from record highs of $2,450, now entering a phase of downside consolidation. Investors assess the implications of the recent cautious stance on inflation and interest rate outlooks, adopted by several Fed officials after April Consumer Price Index (CPI) data from the US fuelled rate cut expectations.
However, bets for aggressive Fed rate cuts this year trimmed significantly after several Fed policymakers this week, raised concerns about the sustainability of the disinflation trend, implying that rates are likely to remain higher for longer.
On Tuesday, Atlanta Federal Reserve President Raphael Bostic said that he is “expecting inflation to decline but relatively slowly, would not expect a rate cut before the fourth quarter.” Fed Governor Christopher Waller noted that he needs to see several more months of good inflation data before being comfortable to support an easing in policy.
In early Asia on Wednesday, Cleveland Fed President Mester said that keeping rates restrictive is not that concerning right now, given the strength of the jobs market. Meanwhile, Boston President Susan Collins said that “patience is the right policy for the Fed.”
The Fedspeak leaning in favor of maintaining a restrictive bias continues to keep Gold buyers on the back foot even though the US Dollar trades broadly subdued, tracking the directionless US Treasury bond yields.
Markets refrain from placing fresh directional bets on the US Dollar and the Gold price, anticipating a potential hawkish surprise from the upcoming Fed Minutes. In the lead-up to the FOMC Minutes, more Fedspeak and the mid-tier US Existing Home Sales data will entertain traders.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price is traversing in a potential five-week-long rising wedge formation.
Meanwhile, the 14-day Relative Strength Index (RSI) has turned south but holds in the positive territory, currently near 64.50, suggesting that there is a good chance of a ‘dip-buying’ trade in Gold price.
However, Gold price needs to yield a daily closing above the upside barrier of the wedge at $2,450 to iniate a sustained uptrend. That level is the lifetime high for Gold price.
Recapturing the latter could expose the upside toward the $2,500 level.
However, if Gold buyers fail to regain lost momentum, a fresh drop toward the May 17 low of $2,374.
The next downside target is seen at $2,350, the confluence of the 21-day Simple Moving Average (SMA) and lower boundary of the potential rising wedge pattern.
The last line of defense of Gold buyers is seen at the 50-day SMA at $2,304.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price consolidates in a tight range above $2,400 early Wednesday, awaiting Fed Minutes.
The US Dollar steadies alongside US Treasury bond yields, as risk sentiment remains tepid.
Bullish RSI on the daily chart continues to keep Gold buyers hopeful.
Gold price is trading back and forth in a tight range above $2,400 early Wednesday, consolidating the previous losses. Gold traders await the Minutes of the US Federal Reserve (Fed) May policy meeting for fresh trading impetus.
Gold price defends $2,400, as Fed Minutes loom
Having kicked off the week on a positive, Gold price retreated from record highs of $2,450, now entering a phase of downside consolidation. Investors assess the implications of the recent cautious stance on inflation and interest rate outlooks, adopted by several Fed officials after April Consumer Price Index (CPI) data from the US fuelled rate cut expectations.
However, bets for aggressive Fed rate cuts this year trimmed significantly after several Fed policymakers this week, raised concerns about the sustainability of the disinflation trend, implying that rates are likely to remain higher for longer.
On Tuesday, Atlanta Federal Reserve President Raphael Bostic said that he is “expecting inflation to decline but relatively slowly, would not expect a rate cut before the fourth quarter.” Fed Governor Christopher Waller noted that he needs to see several more months of good inflation data before being comfortable to support an easing in policy.
In early Asia on Wednesday, Cleveland Fed President Mester said that keeping rates restrictive is not that concerning right now, given the strength of the jobs market. Meanwhile, Boston President Susan Collins said that “patience is the right policy for the Fed.”
The Fedspeak leaning in favor of maintaining a restrictive bias continues to keep Gold buyers on the back foot even though the US Dollar trades broadly subdued, tracking the directionless US Treasury bond yields.
Markets refrain from placing fresh directional bets on the US Dollar and the Gold price, anticipating a potential hawkish surprise from the upcoming Fed Minutes. In the lead-up to the FOMC Minutes, more Fedspeak and the mid-tier US Existing Home Sales data will entertain traders.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price is traversing in a potential five-week-long rising wedge formation.
Meanwhile, the 14-day Relative Strength Index (RSI) has turned south but holds in the positive territory, currently near 64.50, suggesting that there is a good chance of a ‘dip-buying’ trade in Gold price.
However, Gold price needs to yield a daily closing above the upside barrier of the wedge at $2,450 to iniate a sustained uptrend. That level is the lifetime high for Gold price.
Recapturing the latter could expose the upside toward the $2,500 level.
However, if Gold buyers fail to regain lost momentum, a fresh drop toward the May 17 low of $2,374.
The next downside target is seen at $2,350, the confluence of the 21-day Simple Moving Average (SMA) and lower boundary of the potential rising wedge pattern.
The last line of defense of Gold buyers is seen at the 50-day SMA at $2,304.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Oil prices dropped on Wednesday due to an unexpected build in U.S. inventories and concerns over high U.S. interest rates. This marks the fourth consecutive session of decline, fueled by fears of weak demand and reduced geopolitical tensions in the Middle East. Additionally, optimism about China’s economic recovery has cooled.
The American Petroleum Institute reported a 2.5 million barrel increase in U.S. oil inventories for the week ending May 17, contrary to expectations. This unexpected build raised concerns about sluggish oil demand. Traders are wary that persistent inflation and high interest rates will curb demand, despite the upcoming travel-heavy summer season.
Gold price consolidates in a tight range above $2,400 early Wednesday, awaiting Fed Minutes.
The US Dollar steadies alongside US Treasury bond yields, as risk sentiment remains tepid.
Bullish RSI on the daily chart continues to keep Gold buyers hopeful.
Gold price is trading back and forth in a tight range above $2,400 early Wednesday, consolidating the previous losses. Gold traders await the Minutes of the US Federal Reserve (Fed) May policy meeting for fresh trading impetus.
Gold price defends $2,400, as Fed Minutes loom
Having kicked off the week on a positive, Gold price retreated from record highs of $2,450, now entering a phase of downside consolidation. Investors assess the implications of the recent cautious stance on inflation and interest rate outlooks, adopted by several Fed officials after April Consumer Price Index (CPI) data from the US fuelled rate cut expectations.
However, bets for aggressive Fed rate cuts this year trimmed significantly after several Fed policymakers this week, raised concerns about the sustainability of the disinflation trend, implying that rates are likely to remain higher for longer.
On Tuesday, Atlanta Federal Reserve President Raphael Bostic said that he is “expecting inflation to decline but relatively slowly, would not expect a rate cut before the fourth quarter.” Fed Governor Christopher Waller noted that he needs to see several more months of good inflation data before being comfortable to support an easing in policy.
In early Asia on Wednesday, Cleveland Fed President Mester said that keeping rates restrictive is not that concerning right now, given the strength of the jobs market. Meanwhile, Boston President Susan Collins said that “patience is the right policy for the Fed.”
The Fedspeak leaning in favor of maintaining a restrictive bias continues to keep Gold buyers on the back foot even though the US Dollar trades broadly subdued, tracking the directionless US Treasury bond yields.
Markets refrain from placing fresh directional bets on the US Dollar and the Gold price, anticipating a potential hawkish surprise from the upcoming Fed Minutes. In the lead-up to the FOMC Minutes, more Fedspeak and the mid-tier US Existing Home Sales data will entertain traders.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price is traversing in a potential five-week-long rising wedge formation.
Meanwhile, the 14-day Relative Strength Index (RSI) has turned south but holds in the positive territory, currently near 64.50, suggesting that there is a good chance of a ‘dip-buying’ trade in Gold price.
However, Gold price needs to yield a daily closing above the upside barrier of the wedge at $2,450 to iniate a sustained uptrend. That level is the lifetime high for Gold price.
Recapturing the latter could expose the upside toward the $2,500 level.
However, if Gold buyers fail to regain lost momentum, a fresh drop toward the May 17 low of $2,374.
The next downside target is seen at $2,350, the confluence of the 21-day Simple Moving Average (SMA) and lower boundary of the potential rising wedge pattern.
The last line of defense of Gold buyers is seen at the 50-day SMA at $2,304.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Natural Gas Rally Faces Potential Near-Term Consolidation
Natural gas futures have pulled back in early trading on Tuesday, raising questions about the sustainability of the recent rally that has dominated trading this month. Despite a strong opening to the week, overnight data showing cooler trends for the 7-15 day forecast period may contribute to the current selloff. Over the past three weeks, natural gas prices have surged by over 80¢. Continued rallying would depend on major market players anticipating tighter supplies as surpluses shrink in the coming months.
Weather Forecast Highlights Regional Variability
According to NatGasWeather for May 21-27, Texas will experience highs in the 90s to 100s, cooling into the 80s and 90s midweek before heating up again over the weekend. The southern third of the U.S. will remain warm to hot, with highs in the 80s and 90s, locally reaching the 100s in the Southwest. The Ohio Valley and East are expected to warm into the upper 80s to low 90s on Tuesday and Wednesday, with the northern two-thirds of the U.S. remaining comfortable from Thursday through next week.
June natural gas futures have rallied over 40% in May, pushing technical indicators into overbought territory. This significant rise over the past week suggests that the market may be nearing the end of a short-covering fueled rally. Traders should watch for signs of a potential consolidation or correction in the near term.
Market Forecast: Bearish Near-Term Outlook
Given the recent price action and overbought technical indicators, a near-term correction in natural gas prices is likely. Profit-taking and cooler weather forecasts are contributing to the current pullback. However, the longer-term trend remains bullish, driven by expectations of tighter supplies. Traders should prepare for potential volatility and a short-term bearish outlook while keeping an eye on fundamental factors that could influence the market’s direction.
Most are based on the Henry Hub, Louisiana contract, meaning you’re trading US weather. And as somebody who lives in the northeastern part of the United States, I can assure you the weather is not stable. So therefore, you get these massive moves. There are also concerns about natural gas supply in Europe, again. So that means that they may be coming over to Louisiana to pick up their gas.
And it just remains to be seen. But we also have geopolitical concerns and everything else to worry about. Quite frankly, this is a market that’s overextended. So, for myself, I sold off some of my ETF position a couple of days ago, willing to buy in again down here, taking the leverage out. Natural gas is not something you want a lot of leverage in, because a sudden spike in temperature in the summertime can cause something like this, just as the markets can completely collapse, like we’ve seen a couple of times over the last couple of years.
So, protect your account. If you’re going to trade natural gas, do so with a low leverage. Use an ETF if you have the ability. If not, then a small CFD position should suffice because quite frankly, this is a market that can just rocket in either direction. I’m looking for support underneath to add to my position in the ETF and take advantage of what should be a longer term move, but we could see a move all the way down to $2, and I would still be very interested.
For a look at all of today’s economic events, check out our economic calendar.
Gold price retreats further from the new all-time-high of $2,450 set on Monday.
The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
Downside appears limited for Gold, as RSI stays bullish on the daily chart.
The focus shifts to more Fedspeak for policy cues and the next Gold price move.
Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.
Gold price retreats ahead of more Fedspeak
The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.
Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.
Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.
These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.
Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.
In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.
Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.
Gold price technical analysis: Daily chart
As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.
Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.
A sustained move above the latter could open doors for a fresh rally toward $2,500.
However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.
The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price retreats further from the new all-time-high of $2,450 set on Monday.
The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
Downside appears limited for Gold, as RSI stays bullish on the daily chart.
The focus shifts to more Fedspeak for policy cues and the next Gold price move.
Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.
Gold price retreats ahead of more Fedspeak
The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.
Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.
Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.
These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.
Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.
In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.
Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.
Gold price technical analysis: Daily chart
As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.
Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.
A sustained move above the latter could open doors for a fresh rally toward $2,500.
However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.
The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price retreats further from the new all-time-high of $2,450 set on Monday.
The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
Downside appears limited for Gold, as RSI stays bullish on the daily chart.
The focus shifts to more Fedspeak for policy cues and the next Gold price move.
Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.
Gold price retreats ahead of more Fedspeak
The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.
Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.
Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.
These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.
Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.
In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.
Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.
Gold price technical analysis: Daily chart
As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.
Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.
A sustained move above the latter could open doors for a fresh rally toward $2,500.
However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.
The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Oil prices declined in early Asian trading on Tuesday, with expectations of sustained U.S. inflation and higher interest rates dampening consumer and industrial demand.
Both benchmarks fell less than 1% on Monday as Federal Reserve officials awaited clearer signs of slowing inflation before considering rate cuts. Analysts noted fears of weaker demand due to delayed rate cuts.
