Gold declines amid risk appetite sentiment and upcoming U.S. data

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Gold prices sharply retreated on Monday from near $2,350, despite U.S. Treasury yields decreasing, undermining the Dollar’s appetite. Traders brace for a tight economic agenda in the United States, led by the release of inflation figures, retail sales, and Federal Reserve Chairman Jerome Powell’s speech on May 14.

Early Monday, Fed Vice Chair Philip Jefferson addressed the media in a question-and-answer session at the Fed’s Cleveland headquarters. He said, “We continue to look for further evidence that inflation will return to our 2% target.”

XAU/USD trades at $2,336, down 1% on the day, amid a bullish push. Wall Street continues to record gains. The latest labor market data, such as April Nonfarm Payrolls and last week’s Initial Jobless Claims, could pressure the Fed. In its latest monetary policy statement, officials acknowledged that risks to achieving the Fed’s dual mandate of fostering maximum employment and price stability have balanced more over the past year.

Meanwhile, the U.S. Bureau of Labor Statistics (BLS) is expected to release producer and consumer inflation data for April on May 14 and 15. If price pressure accelerates, the Fed may keep rates “higher for longer.”

Technical Analysis of Gold: Gold falls as U.S. data could influence Fed rate path.

Gold prices fell amid declining U.S. Treasury yields and U.S. Dollar strength. The yield on 10-year U.S. Treasury bonds is at 4.479% and has decreased by two basis points (bp) from its opening level. The U.S. Dollar Index (DXY), which tracks the greenback’s performance against six other currencies, is down 0.10% to 105.20.

The bullish trend in the price of Gold remains intact, although from a technical perspective, the formation of an almost shooting star candlestick pattern followed by a bearish Belt Hold line opened the door to a downward stretch. Although momentum favors buyers, the short term points downwards, indicating they are losing traction.

Therefore, the first support for XAU/USD would be the May 9th low at $2,306, followed by $2,300. Once surpassed, the next hurdle would be the 50-day Simple Moving Average (SMA) at $2,249.

On the other hand, if buyers reclaim $2,359, the April 26th high at $2,352 should be targeted. A break of this latter level would expose the $2,400 figure, immediately followed by the April 19th high at $2,417 and the all-time high of $2,431.