Article by: ETO Markets
Gold prices are holding modest gains near $… early in the week, following a notable pullback from the record high touched in April. Market participants remain largely focused on the upcoming US Federal Reserve policy meeting, searching for clearer guidance on the potential timing and pace of future interest rate cuts. Bearish macroeconomic factors currently capping upside potential include the elevated Gold/Silver ratio, suggesting possible overvaluation, alongside rising US Treasury yields, with the 10-year note hovering near 4.23%, which diminishes the appeal of non-yielding bullion. Although recent reports suggest some easing in trade rhetoric, underlying tensions and policy uncertainty, particularly concerning US tariffs, continue to provide support for Gold's safe-haven status. Furthermore, persistent geopolitical risks in the Middle East and Eastern Europe, coupled with ongoing central bank purchasing programmes, offer a fundamental buttress against steeper declines. Overall market sentiment appears cautious, balancing the supportive geopolitical backdrop against potential headwinds from US economic data and central bank policy adjustments.
From a technical perspective, Gold (XAU/USD) is consolidating around the $… level, recovering a bit after retreating significantly from its April peak near $…. The price is currently navigating resistance near the 20-day Simple Moving Average at $…, whilst remaining below the more immediate downward pressure indicated by the 9-day Exponential Moving Average at $…, further breakup could trigger 38.3% Fibonacci retracement, near $…. Bearish momentum is further suggested by the MACD indicator, where the main line (55.43) sits below the signal line (81.15) with a negative histogram value. Initial support can be identified around the 21-day EMA at $…. A more significant support level rests near the May 1st low of $…, a breach of which could signal a deeper correction phase for the precious metal.
