- XAU/USD rises modestly on broad-based USD weakness on Monday.
- The upbeat market mood caps safe-haven gold’s gains.
- Fed speakers and US CPI data will be watched closely.
The XAU/USD pair closed the first day of the week with small losses below $1,700 but didn’t have a tough time staging a rebound. As of writing, the pair was up 0.45% on a daily basis at $1,705.
Gold struggles to determine a direction
Although the USD gathered strength against its major rivals on Monday, the risk-off environment helped the safe-haven gold remain resilient. On Tuesday, recovering market sentiment is weighing on the greenback but not allowing the pair to gather bullish momentum.
Major European equity indexes are rising between 0.4% and 0.95% on the back of risk-on flows while the US Dollar Index is losing 0.32% and 99.91.
In the second half of the day, markets will be paying close attention to the speeches by FOMC members Bullard, Kashkari and Harker. Investors will look for fresh clues regarding the possible use of negative interest rates by the Federal Reserve after the futures market started pricing them by late 2020.
In the meantime, the inflation report from the US will be featured in the US economic docket as well.
Previewing the data, “annual CPI is expected to drop to 0.4% in April from 1.5% in March and the core rate is predicted to fall to 1.7% from 2.1%,” said FX Street analyst Joseph Trevisani. “The central bank’s policy response has been in place for more than two months and will not change because of these anticipated deflationary months.”
Technical levels to watch for
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