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  • Gold dips below key average, pausing corrective rally from the previous week’s low of $1,266.
  • The stalled recovery rally will likely gather traction if the Fed sounds dovish.

Gold (XAU/USD) fell below the 100-hour moving average (HMA) a few minutes before press time, weakening the case for a stronger corrective rally toward $1,300.

The yellow metal had dropped to a low of $1,266 last Tuesday on upbeat US data releases. The selling pressure, however, ebbed, allowing a corrective bounce following the release of the US first quarter GDP report, which showed a slowdown in consumer spending – the main engine of the US economy.

So far, however, the follow-through to Friday’s corrective bounce to $1,288 has been anything but bullish.

In fact, indecision seems to have crept into the market. This is evident from the fact that prices dropped 0.47% on Monday only to rise 0.30% on Tuesday.

As of writing, the yellow metal is trading at $1,280 per Oz and the 100-HMA is seen at $1,281.

The stalled corrective bounce could again gather steam if the US Fed talks rate cuts, although that looks unlikely, courtesy of sustained labor market strength and record highs in stocks.

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