Gold prices (XAU/USD) are down on Wednesday after falling from a record high earlier in the week. Federal Reserve (Fed) members cautioned that the central bank needs more evidence that inflation is slowing down before considering lowering interest rates. This suggests that interest rates might stay high for a longer time, which could strengthen the US Dollar and lower the value of gold priced in USD.
However, the decrease in gold prices might not be significant due to ongoing tensions between the US and China, geopolitical issues in the Middle East, and strong demand from central banks and buyers in Asia. These factors could provide some support to gold prices. Later today, gold traders will pay attention to the release of FOMC Minutes and a speech by Fed’s Goolsbee.
Daily Market Digest: Gold Price Faces Challenges Amid Uncertainty on US Interest Rates
- Fed Governor Christopher Waller mentioned that he doesn’t see a need for more interest rate increases and would need convincing data before supporting any cuts soon.
- Atlanta Fed President Raphael Bostic said the central bank needs to be careful about making the first move on interest rates. He added that he’d prefer to wait longer to make sure inflation doesn’t become unstable.
- Cleveland Fed President Loretta Mester stated that keeping interest rates high isn’t a worry right now because the job market is strong.
- Boston Fed President Susan Collins stated that it will take time to see progress towards lowering interest rates.
- According to the CME Group’s FedWatch tool, financial markets anticipate the first interest rate cut to happen no earlier than September, with two cuts of a quarter percentage point by the end of the year.
- On Tuesday, the US announced tariff increases on many Chinese goods, while China might think about raising temporary tariff rates on imported cars with large engines.
Technical Analysis: Gold Price Maintains Positive Outlook
Gold prices attracted some sellers today. Since the beginning of May, XAU/USD has been following an upward trend. From a technical perspective, gold’s positive outlook remains unchanged as it stays above the important 100-period Exponential Moving Average (EMA) on the four-hour timeframe. The Relative Strength Index (RSI), which indicates the strength of buying or selling pressure, remains in the bullish zone around 63.00, suggesting that there could be further gains in the near term.
The first target for gold’s upward movement would be around the all-time high of $2,450. If the price breaks above this level, it could continue rising towards the upper boundary of the upward trend channel at $2,465, and potentially reach the psychological barrier of $2,500.
In case of a downward movement, the lower boundary of the upward trend channel and the round number level between $2,400 and $2,405 would provide initial support for XAU/USD. Further down, the next support levels to watch are the high from May 10 at $2,378, followed by the 100-period EMA at $2,364.
US Dollar Price Today
Here’s a table displaying how much the US Dollar (USD) changed compared to other major currencies today. The US Dollar showed the most strength against the Japanese Yen.
The heat map displays how much major currencies have changed compared to each other. The currency listed on the left side is considered the base currency, while the currency listed along the top row is the quote currency. For instance, if you choose the Euro on the left side and look across to the Japanese Yen on the horizontal line, the percentage change shown in the box will represent the change between EUR (base) and JPY (quote).
