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