The price of Gold has declined 1.10% and is experiencing its strongest decline since April 22nd. The reasoning behind the decline is de-escalation in the middle east while the US Dollar strengthens. in addition to this, economic data continues to indicate a more hawkish Federal Reserve.

This afternoon, the US released its latest Employment Cost Index, which stood at 1.2%. Surpassing Wall Street’s expectations by 20%, this index measures both private and business labor salaries. Such increases typically exert upward pressure on inflation and suggest an imbalanced job market.

Consequently, the Fed is less inclined to adjust interest rates. Following the release, over 77% of the market anticipates no rate cuts before September 2024. Additionally, analysts expect Friday’s NFP reading to remain consistent. Consequently, Gold is experiencing reduced demand and fewer buy orders.

The price is currently trading below the 75-Bar Exponential Moving Average and at 36.50 on the RSI. Both indicate sellers are controlling the market in the short-medium term. However, investors are also cautious that the price is trading close to support levels from the 23rd to 25th April 2024 and the divergence signal on the 15-Minute Chart. Based on the Fibonacci retracement levels, if the price drops below $2,306.10, the price may see sell signals strengthen.

The Federal Reserve’s statement and press conference tomorrow will significantly impact the exchange rate. If the Chairman suggests that the possibility of a rate cut in the summer is decreasing, the US Dollar may further appreciate. Additionally, the rise in bond yields is also bolstering the Dollar’s strength.