Gold Tries to Hold on Ahead of FOMC!
Gold prices moved slightly above $4,480/oz in early Asian trading on Wednesday (May 20), indicating continued pressure from a strengthening USD and expectations of high interest rates. Gold has been facing downward momentum since the start of the week, while traders await the release of the FOMC Minutes for clues on the direction of the Fed's policy.
From a fundamental perspective, geopolitical tensions between the US and Iran remain a supporting factor for the dollar as a safe haven, while weighing on the precious metal. President Trump's statement regarding the possibility of new attacks, although postponed, added to the uncertainty, causing investors to hold positions in gold.
High crude oil prices have heightened concerns about global inflation. Remaining high inflation has fueled market expectations that the Fed will raise interest rates sooner or by a larger amount than initially expected, putting additional pressure on non-yielding gold.
Bond market data shows long-term US Treasury yields continue to rise, supporting the dollar's strength. The 30-year yield is nearing multi-year highs, while the 10-year is hovering above 4.65%, dampening gold's appeal. This situation has become a fundamental negative catalyst for precious metal prices ahead of the FOMC meeting.
Technically, gold appears to be consolidating in the $4,475–$4,500/oz range, with a short-term downside bias, with short-term support around $4,475–$4,470/oz. If this level is broken, gold could fall to $4,450/oz as the next support. Any rebound attempt could potentially be sold off, reflecting strong fundamental pressure and risk-off sentiment. Trading volume is relatively thin, indicating the market is awaiting direction from the FOMC minutes.
Market sentiment is also influenced by uncertainty regarding the resolution of the Iran conflict. If tensions escalate or the Strait of Hormuz remains closed, energy prices could further drive inflation, maintaining high interest rate expectations and pressuring gold. Conversely, if there are signs of de-escalation, the precious metal could have some room for a temporary rebound.
In conclusion, ahead of tonight's FOMC minutes release, gold's direction is highly dependent on the combination of the USD, bond yields, interest rate expectations, and geopolitical headlines. Strong resistance lies around $4,500/oz, while short-term support awaits market reaction to the Minutes data and developments in the Middle East. (asd)
Source: Newsmaker.id
