Gold price dropped over 1.0% during today's session and is trading at levels not seen since early January as fresh US inflation figures bolstered bets that Fed will stick to its tightening path in order to bring down inflation. Also latest Fed commentary also showed that policymakers largely backed more rate increases, though Fed's Harker said the Fed was nearing the point where rates were restrictive enough. Markets now expect the Fed funds rate to peak around 5.26% in July from the current range of 4.5% to 4.75%. This puts pressure on precious metals, while the dollar strengthens across the board, with the most pronounced buying activity against the antipodean currencies. The yield on the US 10-year Treasury note, seen as a proxy for global borrowing costs, is moving towards 3.8%, a level not seen in more than a month. Traders now look ahead to US retail sales data on 1:30 pm GMT for more clues about the economy. Higher than expected reading would give Fed more reasons to continue on a hawkish path and put further pressure on bullion.
From a technical point of view, gold prices pull back sharply after buyers failed to break above major resistance at $1875. Price is currently approaching crucial support at $1830, which is marked with previous price reactions and 38.2% Fibonacci retracement of the upward wave started in March 2020. Should break lower occur, sell-off may accelerate towards psychological support at $1800.
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GOLD, D1 interval. Source: xStation5
USDIDX - buyers once again approach key resistance area around 103.50, which is marked with previous price reactions and upper limit of the 1:1 structure. If bulls manage to push price above aforementioned resistance, upward move may accelerate towards 105.30, which coincides with 38.2% Fibonacci retracement of the upward wave started in May 2021. On the other hand, if sellers mange to regain control, the nearest support to watch can be found around 100.60.
USDIDX, D1 interval. Source: xStation5
US dollar strengthens across the board during today's session. Source: xStation5
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