Gold recovers toward $1230 as Trump comments trigger a USD sell-off

• Trump voice his concerns about higher interest rates.
• US Dollar Index falls off a cliff, breaks below 95.
• Gold turns flat on the day near $1227.

The XAU/USD pair staged a strong recovery in the NA session after the USD came under a heavy selling pressure following US President Donald Trump unorthodox comments about the Federal Reserve’s monetary policy. In the last 30 minutes, the troy ounce of the precious metal added more than $10 and was last seen trading at $1228, where it was up around 50 cents on the day.

In an interview with CNBC, Trump said that he was not thrilled about the Fed’s rate hikes and was concerned that higher interests would nullify the work that his administration has done in the name of boosting economic expansion. With these comments, Trump became the first president in more than twenty years to deliver direct comments on the monetary policy. Pressured by these remarks, the US Dollar Index, which seemed to be on track to close the day in the positive territory above the 95 mark, fell sharply and was down 0.1% on the day at 94.75 at the time of writing.

In the meantime, the 10-year T-bond yield is down 1% on the day while major equity indexes in the U.S. are recording losses, reflecting a weak market sentiment that helps gold find demand as a safe-haven.  

There won’t be any other macroeconomic data releases in the remainder  of the day and the USD valuation is likely to continue to drive the pair’s price action.

Technical levels to consider

On the upside, the initial resistance for the pair aligns at $1230 (daily high) ahead of $1242 (20-DMA) and $1248 (Jul. 12 high). Supports, on the other hand, could be seen at $1220 (Jul. 18 low), $1211 (daily low) and $1200 (psychological level).