Gold’s shine dims as the greenback rises

The Fed’s minutes released on Wednesday left the market bracing for higher-for-longer interest rates in the US economy. The prospect of higher interest rates sent the gold spot price (XAUUSD) tumbling down during the trading session on Wednesday as an increase in interest rates diminishes the bullion’s appeal as an inflation hedge as it raises the opportunity cost of holding the non-yielding asset.

The spot price of the yellow metal was up on Thursday morning trading session, helped by a slight pullback of the greenback. The gold spot prices seem to be consolidating after the retreat in anticipation of the FOMC meeting minutes as the market looks forward to the Fed’s preferred measure of inflation, US Personal Consumption Expenditure (PCE) figures, on Friday.


The spot price for the precious metal is currently trading at a price level of 1827.63 as it continues to consolidate sideways as the market anticipates the US PCE figures tomorrow after Wednesday’s retreat. The price action has found significant psychological levels at 1847.58 and 1818.98 as the price action’s major resistance and support levels, respectively.

For the bears, if the bearish momentum around elevated interest rates persists, an opportunity could exist if the price action pushes below the price level of 1826.41, a level of interest for the bears. Suppose the price action moves below the initial support level of 1826.41. In that case, an opportunity also exists for the momentum to carry the price further down to the next level of significance at the 1821.84 support level as the price action moves towards the major support level at 1818.98.

Suppose the dovish sentiment picks up after the meeting minutes showed increased dovish statements compared to the December meeting. In that case, the bulls could witness the price action bridging the 1834.52 resistance level, an initial level of significance for the bulls. An opportunity could also exist at the next level of importance at the price level of 1841.87 as the price approaches the major resistance level.


With the market still digesting the Fed’s minutes and already looking forward to the US PCE data tomorrow, a short opportunity could exist as the price pushes below the support level at 1826.41 to the next support level at 1821.84. An opportunity for a long could exist as the price action breaks through the resistance level at the 1834.52 price level to the following resistance level at 1841.87.

Sources: TradingView, Reuters, KoyFin