Gold Price Outlook Fixated on Trade War Risk, FOMC[1] Minutes
GOLD PRICE[2] OUTLOOK – TALKING POINTS
- Gold has potential to rebound sharply from its recent stretch of weakness if looming risks intensify
- XAUUSD might continue to face short-term weakness from the threat of recovering risk appetite and potentially hawkish Fed minutes
- Read about How to Trade Gold[3] or download the free DailyFX Q2 Gold Forecast[4] for additional insight
On Thursday we highlighted how spot gold prices dropped[5] from a 1-month high as yields rebounded along with risk appetite. Gold faced further weakness during Friday’s trading session as short-term interest rates climbed higher along with the US Dollar[6] in response to a robust Consumer Sentiment[7] report. Gold was subsequently dragged lower considering American consumers reportedly feel the most optimistic in 15 years with rebounding inflation expectations – a development that may help keep Fed rate cut prospects at bay.
GOLD PRICE (XAUUSD) CHART: 1-HOUR TIME FRAME (MAY 10, 2019 TO MAY 17, 2019)
The risk that markets are overpricing the probability that the Fed cuts rates this year could weigh negatively on gold if reversed. Wednesday’s release of the latest FOMC meeting[8] minutes could trigger traders to develop a more hawkish perception of the Fed which would threaten XAUUSD due to the prospect of higher future interest rates. This in additional to weak gold chart[9] technicals merges with the possible further weakness in the
