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  • Gold (XAU/USD) looks set for a corrective rally to $1,302, the technical charts indicate.
  • Dovish Fed fails to put a bid under the yellow metal.

The multiple long-tailed daily doji candles and a strong bullish price relative strength index (RSI) divergence in the 4-hour chart indicates scope for a corrective rally in gold (XAU/USD) to $1,302 levels.

However, the yellow metal continues to have a tough time scaling the resistance offered by the descending (bearish) 50-candle moving average (MA) in the 4-hour chart, currently seen at $1,295.

Gold fails to cheer dovish Fed

The Fed minutes released yesterday used the word “symmetric” nine times in reference to inflation, indicating the policymakers would allow inflation to run above the 2 percent target for some time. Further, the minutes warned about the negative impact of Trump administration’s get-tough trade policy.

The dollar index (DXY) retreated from 94.19 to 93.86 in response to dovish Fed minutes. Meanwhile, the 10-year treasury yield fell below 3 percent. Still, the metal failed to catch a bid, which is usually the case when the bearish sentiment is strong.

Gold Technical Levels

As of writing, gold is trading at $1,295/Oz. The resistance is seen at$1,297 (10-day MA), $1,300 (psychological hurdle), and $1,307 (200-day MA). Meanwhile, support is lined up at $1,293 (5-day MA), $1,287 (previous day’s low), and $1,282 (May 21 low).