Gold extended losses during Wednesday’s North American session, slipping below the $3,300 mark after peaking at $3,325 earlier in the day. At the time of writing, XAU/USD is down about 0.27% as investors digest the latest Federal Reserve policy minutes.
The Fed’s May 6-7 meeting underscored a cautious stance, keeping interest rates steady amid uncertainty over tariffs’ economic impact. Officials noted the risk of stagflation, acknowledging “difficult tradeoffs” if inflation remains persistent while growth and employment weaken. Policymakers are waiting for clearer economic signals following recent government policy changes. Notably, this meeting occurred before President Trump’s tariff reductions on China from 145% to 30%.
Gold’s rally has stalled as US Treasury yields rebound, with the 10-year note yield rising 4.5 basis points to 4.493%, supporting the US Dollar Index (DXY), which advanced over 0.33% to 99.89. Consumer confidence hitting a four-year high further bolstered the Dollar.
Despite these headwinds, geopolitical tensions—especially involving Russia-Ukraine and the Middle East—continue to underpin bullion’s appeal. Goldman Sachs recently recommended a higher allocation to gold in long-term portfolios, citing elevated US institutional risks, Fed pressures, and sustained central bank demand.
Market watchers also note a potential US-India trade framework nearing announcement, indicating a softer US trade stance that could influence global economic dynamics.
Looking ahead, key releases this week include the US Q1 GDP second estimate and the Fed’s preferred inflation metric, the Core Personal Consumption Expenditures (PCE) Price Index.
Technical Outlook:
Gold has consolidated between $3,280 and $3,330 over recent sessions, with momentum indicators like the Relative Strength Index (RSI) edging toward neutral territory. A break below the 50 RSI line may trigger further downside.
Bullish momentum would require clearing resistance levels at $3,300, $3,400, and the May 7 swing high of $3,438, with $3,500 as the next target.
On the downside, a drop below $3,250 could open the door to testing the 50-day Simple Moving Average near $3,211 and the May 20 low of $3,204.
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