Will gold rise?
The XAU/USD pair is declining in Thursday trading, retreating from the local high of $2,328 per ounce reached the day before. Gold is trading at $2,310, while market participants continue to analyze the macroeconomic background from the United States.
Following a meeting on Wednesday, the leadership of the Federal Reserve System (FRS) decided to keep the interest rate at 5.50% for the sixth time in a row, arguing that the “tough” position is still high inflation in the United States, which limits the regulator’s ability to ease monetary policy. Moreover, commenting on the decision, the head of the department, Jerome Powell, noted that the regulator is currently not confident that the growth rate of consumer prices will reach target values in the near future. Powell also repeated that further decisions of the “central bank” will depend on incoming macroeconomic reports, as well as on the inflation situation in the economy. At the same time, the current restrictive monetary policy may continue for a longer time than predicted at the beginning of this year.
Despite the fact that the Fed’s rhetoric remained “tough”, and market participants are still confident that the decision on the first rate cut in the US will be agreed upon no earlier than September, the American currency has faced local resistance from sellers. In particular, at the end of the day the dollar index (DXY) fell by more than 0.5% and returned to the 105.50 area where it was trading at the beginning of the week. Market participants attribute such dollar dynamics to ambiguous macroeconomic statistics, which were published intraday. Thus, the index of business activity in the manufacturing sector from the Institute for Supply Management (ISM) in April decreased from 50.3 points to 49.2 points with a forecast of a decline to 50 points, while a report from Automatic Data Processing (ADP) on employment in the private sector showed a decrease in the number of jobs from 208 thousand to 192 thousand. Today, the dollar also remains under pressure, but market sentiment may change tomorrow, when data on the US labor market (nonfarm payrolls) and the ISM service sector activity index are presented to traders. This time, statistics may support the position of the dollar, which will negatively affect gold, given the inverse correlation of the metal with the US currency. Thus, the current levels of the XAU/USD pair can be used for more profitable sales.
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