The gold price recovered some of its overnight losses as investors continued to flee the US dollar, making the safe-haven precious metal more affordable. At $1,853, XAU/USD is slightly higher in Asia, up 0.18 percent at the time of writing, on its way to a new high for the day at $1,854.27.

The Fed’s May 3-4 policy meeting minutes revealed that most participants favor additional 50 basis point rate hikes in June and July. Higher short-term US interest rates and bond yields raise the opportunity cost of holding GOLD, which yields nothing. “Without the conviction that the Fed will blink, few participants are left to buy gold, leaving a liquidation vacuum as the playbook in gold,” TD Securities analysts argued.

However, US Treasury yields fell after the benchmark 10-year note fell to a six-week low. Traders and investors will assess inflation risks, but concerns are fading as economic data and corporate announcements point to slower growth. Furthermore, the dollar index (DXY) is expected to fall for the second week, making bullion less expensive for buyers. DXY is down 0.32 percent at 101.437 as of this writing.

Lastly, the possibility of an economic slowdown driven by Chinese lockdowns and the Russia-Ukraine war has increased safe-haven buying. However, this is offset by concerns about the US Federal Reserve’s aggressive rate hike cycle. Ultimately, what happens with inflation over the next few months will significantly impact gold’s performance.

Gold Technical Outlook

The gold price faced negative pressure in the previous sessions, testing the key support of 1850.00. However, the price is now consolidating beyond this support, as the EMA50 protects the recently suggested positive scenario, and stochastic begins to provide positive overlapping signals.

As a result of these factors, we recommend a bullish bias in the coming sessions, with a target of 1890.00 as the next main station. However, a break of 1850.00 followed by 1838.10 will halt the expected rise and force the price to fall.

Today’s trading range is expected to be between 1835 support and 1880 resistance. Good luck!