XAUUSD fell nearly 2% on Wednesday (May 7), mainly due to a stronger US dollar and optimism from upcoming trade talks between the United States and China, while the Federal Reserve's "standstill" also added pressure on gold prices. However, it was supported by escalating geopolitical risks.On Wednesday, the Federal Open Market Committee (FOMC) left the target range for the federal funds rate unchanged at 4.25%-4.50%, citing increasing uncertainty about the economic outlook and rising risks to both maximum employment and price stability. “Uncertainties about the economic outlook continue to increase,” the FOMC said in its post-meeting statement. “The Committee is concerned about bilateral risks to its dual mandate and sees increasing risks to unemployment and inflation.”
Federal Reserve Chairman Powell maintained a neutral tone, saying the current policy stance was appropriate and the Fed was in no rush to adjust interest rates. He stressed that the Fed was prepared to act “quickly as needed” if circumstances changed, but warned that the Fed’s goals would not be fully achieved if tariffs remained in place.
Powell added that if either side of the dual mandate deviates too much, the Fed will evaluate which policy tool to use to achieve rebalancing.
When asked which mandate, inflation or employment, should receive more attention, he said it was too early to tell.
The market consensus remains that the Fed will not cut rates before July. In a higher interest rate environment, non-interest-bearing gold is often under pressure.
Big news on China-US trade talks
China and the US announced that US Treasury Secretary Besant and US Trade Representative Greer will travel to Switzerland to meet with Chinese Vice Premier He Lifeng.
The talks are the first since US President Donald Trump imposed comprehensive tariffs on China and have raised optimism that the two largest economies can reach a deal.
On Wednesday, a spokesperson for the Chinese Ministry of Commerce answered reporters' questions about the high-level economic and trade negotiations between China and the United States. The spokesperson said China has decided to cooperate with the United States. Vice Premier He Lifeng, as head of the China-US economic and trade negotiation delegation, will hold talks with his US counterpart, US Treasury Secretary Benson, during his visit to Switzerland. - Bloomberg -
India-Pakistan tensions spiral after attack, risk of further escalation fuels demand for safe havens
India's airstrike on Pakistan has stoked tensions, raising fears of a full-blown war between the two nuclear-armed nations.
India launched missiles at nine locations in Pakistan and Pakistan-administered Kashmir early on May 7 in response to a shooting that killed 26 tourists in Pahalgam, Jammu and Kashmir, two weeks ago. The Indian Ministry of Defense said its forces struck facilities used by "terrorist groups" to carry out the Pahalgam attack.
The Indian Air Force has mobilized many modern weapons, including Rafale multi-role fighters carrying SCALP-EG stealth cruise missiles and AASM Hammer extended-range guided bombs and cruise missiles. The target coordinates were provided to the forces participating in the campaign by Indian intelligence agencies.
Images released by the media show the moment the series of missiles crashed into the target, creating large fire circles and violent explosions. Pakistan said at least 26 people were killed in this attack. -According to Vnexpress -
Gold is an asset that often benefits first when market risks appear, and India is also a leading gold-using country in the world.
Technical Outlook Analysis
XAUUSD After yesterday's decline, gold continues to receive support from the 0.236% Fibonacci retracement area with horizontal support at $3,350 as noted by readers in yesterday's edition and it is now also aiming for a target of $3,430.
Once gold breaks $3,430 it will be in a position to continue its rally with a target of around (all-time high) in the short term.
Technical factors are completely bullish, from the short-term trend noted by the rising price channel and the long-term trend from the rising price channel. On the other hand, the nearest support is also the EMA21.
The relative strength index RSI is still quite far from the 80 level and the overbought area, indicating that there is still room for growth ahead and gold is likely to continue to increase in terms of momentum in the coming time.
During the day, the main bullish outlook for gold prices in terms of technology will be noted again by the following levels.
Support: 3,371 – 3,350 USD
Resistance: 3,430 – 3,500 USD
SELL XAUUSD PRICE 3440 - 3438⚡️
↠↠ Stop Loss 3444
→Take Profit 1 3432
↨
→Take Profit 2 3426
BUY XAUUSD PRICE 3350 - 3352⚡️
↠↠ Stop Loss 3346
→Take Profit 1 3358
↨
→Take Profit 2 3364
Trade active
Plan BUY +95pips close a part move SL to entry.🔥Trade closed: target reached
Plan BUY +110pips🔼🔼🔼Note
🔴Gold Spot fell $9, back below $3,300 an ounce, down 0.24% on the day.Note
Note
Positive signals from US-China trade negotiations increased risk sentiment, causing gold prices to drop sharply by 1.8% in the Asian session to around $3,265/oz.Note
Gold recovers to $3,245/ozNote
Gold held on to modest gains after weaker-than-expected US inflation data boosted traders' expectations of a Federal Reserve interest rate cut.
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🔰| Forex trading
🧩Get an average of 1200 pips per month
🧩Consulting on Risk Management
🧩Account management
🧩Forex signals have a high win rate
🚨🚨🚨FREE SIGNALS: t.me/+8q3AxDD9CsRjYzI1
🧩Get an average of 1200 pips per month
🧩Consulting on Risk Management
🧩Account management
🧩Forex signals have a high win rate
🚨🚨🚨FREE SIGNALS: t.me/+8q3AxDD9CsRjYzI1
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.