Market Data 
- Gold price retraces on the rebound of the USD on Friday.
- The Fed’s cautious approach weighs on the yellow metal.
- Gold traders will focus on the Fed’s Kashkari, Waller, and Daly speeches on Friday.
The gold price (XAU/USD) trades with a bearish bias on Friday after retreating from the nearly $2,400 barrier. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Federal Reserve (Fed). However, the cautious approach from Fed officials on Thursday to keep borrowing costs high for longer suggested that the US central bank is not in a rush to cut interest rates this year. This, in turn, boosts the US Dollar (USD) broadly and drags the yellow metal lower, as higher interest rates might well reduce overall investment demand for non-yielding gold.
In the absence of top-tier economic data from the US docket, market participants will monitor Fedspeak, which might offer some hints about the future path of the Fed’s monetary policy. The Fed’s Kashkari, Waller, and Daly are set to speak later on Friday.
Daily Digest Market Movers: Gold price edges lower as Fed officials suggest interest rates should stay higher for longer
- The US weekly Initial Jobless Claims increased by 222K for the week ending May 11 from 232K in the previous week, above the 220K estimated, according to the US Bureau of Labor Statistics (BLS).
- Housing Starts rose by 5.7% MoM to 1.36 million in April, while Building Permits dropped by 3% MoM in April to 1.44 million.
- Atlanta Fed President Raphael Bostic said he saw signs of cooling inflation in the recent CPI report, but he prefers to watch the May and June data to gain confidence that the inflation doesn’t turn back the other way.
- Cleveland Fed President Loretta Mester said policy was well positioned, and it was too soon to say progress on inflation had stalled.
- Richmond Fed President Tom Barkin noted the central bank needs to keep borrowing costs high for longer to ensure inflation is on track to its target, citing higher prices in the services sector.
- Financial markets are currently pricing in nearly 75% odds of a Fed rate cut in September, an increase from 65% earlier in the week. The markets are also pricing in full 25 basis point (bps) rate cuts before the end of the year, according to the CME FedWatch Tool.
Technical Analysis: Gold price’s upside remains intact
The gold price trades on a negative note on the day. According to the four-hour chart, the precious metal has formed an ascending trend channel since May 2. The constructive outlook of gold remains intact, as it is above the 100-period Exponential Moving Average (EMA). The path of least resistance level is to the upside, as XAU/USD stands in bullish territory around 62.00.
The upper boundary of the ascending trend channel and psychological barrier of $2,400 act as a crucial resistance level for the yellow metal for the time being. With a break above this level, gold could make another attempt at an all-time high of $2,432 en route to the $2,500 round figure.
In the bearish case, the first downside filter to watch is the lower limit of the ascending trend channel of $2,355. Further south, the next contention level is seen at the 100-period EMA at $2,340. Any follow-through selling below the mentioned level might drag XAU/USD back to $2,300.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.07% | 0.11% | 0.08% | 0.25% | 0.31% | 0.19% | 0.11% | |
| EUR | -0.07% | 0.04% | 0.00% | 0.18% | 0.24% | 0.13% | 0.04% | |
| GBP | -0.11% | -0.04% | -0.04% | 0.14% | 0.19% | 0.07% | -0.01% | |
| CAD | -0.08% | -0.01% | 0.04% | 0.17% | 0.23% | 0.12% | 0.03% | |
| AUD | -0.26% | -0.18% | -0.13% | -0.17% | 0.06% | -0.06% | -0.14% | |
| JPY | -0.32% | -0.24% | -0.20% | -0.23% | -0.07% | -0.11% | -0.19% | |
| NZD | -0.20% | -0.13% | -0.09% | -0.13% | 0.05% | 0.10% | -0.10% | |
| CHF | -0.11% | -0.03% | 0.01% | -0.03% | 0.15% | 0.20% | 0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
