May 17

Gold price loses momentum, with Fed speakers in focus

Gold price trades with a bearish bias on Friday after retreating from the nearly $2,400 barrier. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Federal Reserve.

Technical Overview

The XAU/USD pair is marginally lower on a daily basis, but the overall stance is bullish. The daily chart shows that technical indicators remain within positive levels, partially losing their upward strength but far from suggesting an upcoming decline. At the same time, the pair is developing well above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMA maintain their bullish slopes below the shorter one, usually a sign of bullish strength.

Technical readings in the 4-hour suggest the recent slide was corrective, and also that XAU/USD is poised to resume its advance. The pair trades well above bullish moving averages while technical indicators consolidate within positive levels, paring their slides from overbought readings. Renewed buying pressure beyond 2,390 will likely result in an advance beyond the $2,400 mark.

Support levels: 2,378.10 2,361.35 2,345.20

Resistance levels: 2,392.50, 2,403.10 2,417.60 


Fundamental Overview

Gold trades with a soft tone on Thursday, hovering around the $2,380 level at the time being after peaking earlier in the day at $2,397.34. The US Dollar recovered some ground throughout the first half of the day after falling to fresh multi-week lows against major rivals following the release of discouraging United States (US) data on Wednesday. The country confirmed the Consumer Price Index (CPI) held at 3.4% YoY in April, matching March’s reading and still far from the Federal Reserve’s (Fed) 2% goal.

A mostly quiet European session temporarily helped the USD, but the American currency resumed its slide following the release of dismal US data. On the one hand, Initial Jobless Claims for the week ended May 3 were up by 222K, worse than anticipated. Furthermore, the previous week’s figure was upwardly revised to 232K. Additionally, the country published the May Philadelphia Fed Manufacturing Survey, which contracted to 4.5, also missing expectations. Finally,  April Industrial Production remained unchanged, while Capacity Utilization slid to 78.4% from 78.5% in March.

Wall Street shrugged off the negative headlines, and the three major indexes trade in the green, although gains are modest. Speculative interest somehow believes negative figures could speed up the Fed’s decision to cut interest rates, retaining optimism.