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Gold Rally Stalls on Firm US Data, Delayed Fed Rate Cut Expectations

Gold (XAU/USD) retreated from near the crucial $2,400 resistance early Tuesday following strong US Retail Sales data. This data fueled renewed upward pressure on the US Dollar and Treasury yields, casting doubt on the timing of an initial Federal Reserve (Fed) rate cut.

Market Movers

  • 10-year US Treasury yields climb to a five-month high near 4.63%.
  • Market expectations now favor a September start to Fed rate cuts, with only two cuts projected versus the three in the latest Fed dot plot.
  • The US Dollar Index (DXY) rises to 106.30.

Gold’s Headwinds

Rising bond yields increase the opportunity cost of holding non-yielding assets like Gold, putting downward pressure on prices. Despite this, Gold has performed well in recent weeks amidst geopolitical uncertainty. Geopolitical tensions generally bolster safe-haven demand for Gold.

Technical Outlook: Gold Retreats, RSI Signals Overbought

Gold is facing resistance after failing to break the $2,430 level. While near-term momentum remains positive, momentum oscillators are signaling overbought conditions. The Relative Strength Index (RSI) has retreated slightly from its peak near 85.00, though remains in bullish territory.

Key Support Levels:

  • April 5th low near $2,268
  • March 21st high at $2,223