Gold Price Consolidates as US Dollar Gains on Strong Retail Sales

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Gold (XAU/USD) trades sideways near $2,350 on Monday after Friday’s losses. Short-term demand has softened due to reduced geopolitical tensions and diminished expectations for imminent Federal Reserve (Fed) rate cuts.

Market Movers

  • Easing Israel-Iran tensions have reduced safe-haven demand for Gold. President Biden affirmed that the US will not support an Israeli counterattack on Iran.
  • Lessened Fed cut bets for June/July meetings have weighed on Gold prices. Fed officials maintain a hawkish stance, emphasizing the need to keep rates restrictive until inflation reaches its 2% target.
  • Robust US Retail Sales data for March fueled a rally in bond yields and the US Dollar. Increased household spending signals persistent inflationary pressure.

Impact on Gold

Rising US Treasury yields increase the opportunity cost of holding non-yielding assets like Gold. The 10-year yield climbed to 4.61%, while the US Dollar Index (DXY) hit a fresh five-month high near 106.16.

Technical Outlook: Gold Retreats from Highs, RSI Signals Overbought

Gold is correcting from recent all-time highs near $2,430. Momentum oscillators signal overbought conditions, with the Relative Strength Index (RSI) retreating slightly after peaking near 85.00. Near-term demand remains intact with the RSI in the bullish range, but a further cooling of momentum could trigger additional consolidation or a pullback.

Key Support Levels:

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

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