Gold price (XAU/USD) attempted a recovery after dropping to nearly $1,940.00. The precious metal has extended its rebound to almost $1,950.00 as the US Dollar Index (DXY) has fallen sharply. Broader choppiness in the USD Index has kept investors on their toes. This week’s absence of potential triggers has bounded the USD Index in a limited territory.
S&P500 futures have recovered their total losses and have turned positive, showing signs of recovery in the risk appetite of the market participants. Investors seem to have started shrugging off fears associated with expectations of more interest rate hikes by the Federal Reserve (Fed).
The USD Index has found an intermediate support of around 103.80. However, the situation for the USD index seems vulnerable as the market sentiment has turned cheerful. Despite the short-term correction, strength in the USD Index would stay as the Fed is expected to remain hawkish further.
Meanwhile, a survey from Reuters showed that “It would take rate cuts from the Federal Reserve to weaken the currency substantially.” Also, Fed would pause in June for the first time in more than a year and keep its key interest rate at 5.00%-5.25% then and for the rest of the year.
Gold Technical Analysis
Gold price is hovering near the upward-sloping trendline of the Ascending Triangle pattern on a two-hour scale plotted from May 30 low at $1,932.12. The horizontal resistance of the pattern above is placed from May 19 high at $1,983.29. The precious metal trades below the 50-period Exponential Moving Average (EMA) at $1,955.38, indicating the short-term trend is bearish.
Meanwhile, the Relative Strength Index (RSI) (14) struggles to hold itself above 40.00.