Gold prices retreated slightly after two days of gains, consolidating near familiar levels ahead of the crucial US Federal Reserve interest rate decision scheduled for May 1st.
Mixed US Data Fuels Fed Uncertainty
Recent economic data from the US painted a mixed picture. While GDP growth fell short of expectations, inflation, as measured by the Fed’s preferred gauge (Core PCE), remained stagnant at 2.8% YoY for the second month in a row.
Lower Yields, Weaker Dollar Support Gold
The XAU/USD (gold price in USD) dipped below its daily open, currently trading around $2,334. This decline can be attributed to improved risk appetite, lower US Treasury yields, and a weaker US Dollar.
Fed Policy, Nonfarm Payrolls in Focus
Markets anticipate the Fed to maintain current interest rates, aligning with recent comments by Fed Chair Jerome Powell. However, investors remain cautious as they await the May 1st decision. Additionally, the release of US Nonfarm Payrolls data on Friday is another key event to watch.
Technical Analysis: Gold Seeks Direction
Despite the pullback, gold maintains an upward bias. To extend gains, buyers need to recapture the April 26th high of $2,352. This would keep hopes alive for a challenge on higher resistance levels. Key resistance points include $2,400, $2,417 (April 19th high), and the all-time high of $2,431.
Conversely, a dip below the April 15th daily low of $2,324 could trigger a test of $2,300. A breach of this level would expose further support at $2,229 (April 23rd low) and $2,222 (March 21st high).
