Market Analysis
Despite the US Dollar (USD) consolidating on Tuesday, the price of gold (XAU/USD) has rebounded. However, the upward movement of the yellow metal might be limited as traders adopt a cautious approach ahead of key US inflation data scheduled for later this week. Recent sessions have seen some selling pressure on XAU/USD due to the prevailing notion of higher US interest rates in the near term. Nevertheless, ongoing tensions in the Middle East continue to attract safe-haven flows, temporarily supporting the gold price.
Market participants will closely monitor crucial US economic indicators this week, including the Producer Price Index (PPI) for April and a speech by Fed Chair Jerome Powell, both slated for Tuesday. Attention will then turn to the Consumer Price Index (CPI) on Wednesday, with analysts eager for insights into the potential timing of the Fed's initial rate adjustments.
Any inflation figures surpassing expectations may diminish the likelihood of a Fed rate cut, consequently weighing on the precious metal. The prospect of higher interest rates could reduce overall investment demand for gold, as holding it becomes relatively more costly.
In terms of technical analysis, the gold price continues to exhibit a positive outlook. XAU/USD is edging higher, maintaining a bullish sentiment, with the price remaining above the critical 100-day Exponential Moving Average (EMA) on the four-hour chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which indicates that the current support level is likely to hold firm rather than give way.
Key resistance levels for gold include the May 10 peak at $2,378, with further gains potentially leading to the psychological barrier of $2,400. Breaking above this level could initiate a rally toward the all-time high near $2,432, with a subsequent target at the $2,500 mark. Conversely, crucial support is expected around the $2,325–$2,340 range, marked by a confluence of the resistance-turned-support level and the 100-period EMA. A breach of this support zone may expose the May 2 low at $2,281.
US Dollar price today
In terms of the US Dollar's performance today, it experienced weakness against major currencies, particularly the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.06% | 0.05% | 0.12% | 0.14% | 0.13% | 0.15% | 0.06% | |
| EUR | -0.07% | 0.00% | 0.05% | 0.06% | 0.08% | 0.09% | 0.01% | |
| GBP | -0.05% | 0.02% | 0.08% | 0.09% | 0.10% | 0.11% | 0.02% | |
| CAD | -0.12% | -0.05% | -0.08% | 0.02% | 0.02% | 0.03% | -0.05% | |
| AUD | -0.15% | -0.06% | -0.09% | 0.00% | 0.01% | 0.00% | -0.05% | |
| JPY | -0.13% | -0.07% | -0.10% | -0.02% | 0.00% | -0.01% | -0.07% | |
| NZD | -0.13% | -0.03% | -0.07% | -0.03% | 0.00% | 0.02% | -0.05% | |
| CHF | -0.09% | -0.01% | -0.03% | 0.05% | 0.06% | 0.07% | 0.08% |
Paraphrasing text from "FX Street" all rights reserved by the original author.