- Gold prices recede from intraday high of $1,718.71 as traders look for a firm direction during the pre-Fed quiet session.
- Downbeat China data fail to entertain markets neither does the UK and the US tension with Beijing.
- US dollar remains on the back foot near three-month low ahead of FOMC.
- US Fed is likely to keep benchmark rate unchanged, quarterly forecasts and rate dot-plot will be the key.
Gold prices rise to $1,716.78, up 0.12% on a day, during the pre-European session on Wednesday. The US dollar weakness, coupled with the political noises surrounding China, seems to keep the bullion buyers happy off-late. However, the pre-Fed trading lull continues to restrict the precious metal’s short-term moves.
In addition to the recently hyped political tension of the UK and the US with Beijing, downbeat figures of China’s May month inflation data also failed to propel the safe-haven’s moves. Furthermore, Japan also contributed to the market’s cautious sentiment while saying not to open borders with China for now.
Even so, the US 10-year Treasury yields remain mostly unchanged around 0.83% whereas stocks in Asia flash mixed clues. It should, however, be noted that the US dollar remains pressured near the lowest since early-March amid calls that the Fed can use unconventional monetary policy tools to balance between the upbeat data and the need for stimulus to combat the coronavirus (COVID-19).
Looking forward, the US Consumer Price Index (CPI) data for May might offer intermediate moves to the yellow metal ahead of the US Federal Reserve’s monetary policy decision. While the US CPI is expected to recede from 0.3% to 0.2% in May, the Fed’s signal for future interest rates and economic projections will be the key to watch during the late-US session.
Amid all these plays, geopolitical tension in Libya, Korea and concerning China can keep offering the background music. Should there be a surprise crackdown at any of these fronts, the market’s rush to safety could help the yellow metal to rise further towards a three-week-old resistance line near $1,735.
Technical analysis
Unless witnessing any clear break of either May month low near $1,670 or the short-term resistance line, currently around $1,735, gold prices remain directionless.
Share
