Article by: ETO Markets

The price of gold fails to build on the day's gains and moves in a narrow range. The Federal Reserve may postpone interest rate reductions, according to rumours fuelled by a strong US inflation report, which keeps the returns on US Treasury bonds high. This helps the US Dollar draw in some buyers, which, together with the general risk-on sentiment, limits the precious metal's upside potential under overbought daily chart conditions. 

Nonetheless, the markets continue to factor in a higher likelihood that the Fed would start reducing interest rates during the June policy meeting. Aside from this, geopolitical threats resulting from the ongoing conflict in the Middle East and Russia-Ukraine may continue to support the price of gold. Ahead of the critical FOMC meeting the following week, which is expected to provide clues about the Fed's route toward rate cuts and identify the next leg of a directional move for the non-yielding yellow metal, traders may also opt to stay out of the market. 

A surprising drop in US Crude stocks is blamed for the spike in oil prices, indicating a strengthening of demand. Oil prices have also increased due to worries about possible supply interruptions brought on by Ukrainian raids on Russian refineries.

The Australian Dollar loses its intraday gains on Thursday and enters negative territory. The Federal Reserve is expected to start cutting interest rates in June, which is why the AUD/USD pair rose, even if the Reserve Bank of Australia is still indicating that it might need to boost rates even more. Australia's inflation is largely "homegrown" and "demand-driven," resulting from rising wage inflation and a robust labour market. The Reserve Bank of Australia believes that inflation won't return to target until 2026.

The British Pound might continue to draw support from expectations that the Bank of England might keep interest rates higher for longer. In contrast, investors seem convinced that the Federal Reserve will start cutting interest rates at the June policy meeting. This, along with the underlying strong bullish sentiment around the global equity markets, should cap the upside for the safe-haven Greenback and act as a tailwind for the GBP/USD pair.

The latest breakthrough above the horizontal barrier at … confirms the optimistic short-term view. Furthermore, oscillators on the daily chart remain firmly in the bullish zone despite having backed off from earlier levels, indicating that the GBP/USD pair's path of least resistance is upward. Therefore, any additional drop might still draw some buyers close to the resistance breakpoint of ...

Conversely, any significant upswing over … is probably going to run up some resistance close to the weekly swing high, which is located in the …–… range. A persistent increase above should enable the GBP/USD pair to try again to break over the ...

The Japanese yen fell against the US dollar for the third day in a row and remained close to the weekly low that was reached on the same day. Expectations of an early interest rate hike were dashed by Bank of Japan Governor Kazuo Ueda's somewhat more pessimistic assessment of the economy earlier this week. This keeps undermining the safe-haven value of the Japanese yen, along with the recent bullish run in the world financial markets. 

The USD/JPY pair has been shown some resilience below the December-to-February Fibonacci retracement level of 38.2%. The second up advance, however, failed ahead of the 23.6% Fibonacci level and had difficulty gaining traction above the 100-DMA. Furthermore, oscillators on the daily chart continue to maintain well outside of the oversold zone, deep in negative territory. Consequently, there is a chance that some selling may start to appear around … and stay near ... The latter should serve as a crucial turning point that, if it is successfully cleared, will imply that the recent rapid retreat from the … zone has peaked and that spot prices can now retake the … level.

Conversely, weakness below the low of the Asian session, which is located near …, is probably going to find some support close to the … mark, which is ahead of the 38.2% Fibonacci level, which is located in the … zone. The 200-DMA, which is now located close to the …, and the monthly trough, which is centred around the … area, trail closely behind this.