Gold recovered slightly, Fed minutes will decide next move

Gold prices had a neutral trade yesterday. Yellow metal remained sideline as traders stayed away to take fresh positions ahead of minutes of the Federal Reserve’s June meeting.

Following a sharp decline below 57800 last week, the price of the yellow metal has made a little comeback during the last three days. The main factor pushing up gold prices was concern over an increase in U.S. interest rates.

Fed minutes will give the direction as markets watch for the July rate hike

The minutes of the Fed’s June meeting are scheduled to be released today.  it may provide more cues on the path of U.S. interest rates while the central bank had kept rates on hold last month, it had also flagged at least two more hikes this year, given that inflation remains high.

The Fed Chair Jerome Powell reaffirmed this in a number of speeches and testimony during the previous two weeks.

The odds that the central bank will increase interest rates by 25 basis points later in July are currently 88%. While recent data showed that overall U.S. inflation declined, core inflation remained sticky and well above the Fed’s target range.

The prospect of a rate hike in July will add pressure on Gold prices or vice versa.

Technical Outlook

Gold Future has bottomed out from the low of 57651 (29 June 2023) and recovered towards 58545 yesterday’s high. Prices settled at 58409, up 0.23%.

Since 2 June 2023, Gold prices have been trading in a downward trend and trading in between two parallel lines drawn on the chart. Now, prices are trading near their massive resistance of 58560, coinciding with 50 SMA. A break above will assume the next resistance 58850-59500-59900.

On the downside, crucial support is seen at 57500 coinciding with lower-line support. A break below will put pressure and prices may test 57050-56500.00.

Trades may go long only above 58580 else wait for a dip towards 58050-57950.00.