Gold retreats from 5-week high as dollar sell-off stalls

Gold prices retreated from the 5-week high of $1274.09 as the dollar sell-off came to a halt near critical support, although the subsequent recovery has been anything but encouraging.

The USD bears ran out of steam as the Dollar Index (DXY) closed-in on the critical support level of 96.80. Consequently, the yellow metal failed to hold on to the 5-week high of $1274.09 levels.

Eyes US ISM manufacturing data

The traders would want to see if the manufacturing sector added jobs in April. Moreover, the ISM non-manufacturing employment sub index, which is a more reliable advance indicator of job growth, will be released next week.

A strong ISM manufacturing employment sub index would help dollar index post a sharp rebound from the support of 96.80.

CME FedWatch June rate hike odds at 91.2%

The US dollar may regain bid tone as we near the June Fed rate decision, given the 25 basis point rate hike looks pretty much a done deal. Thus, in a bigger scheme of things, gold may find it difficult to revisit $1300 levels ahead of the June Fed.

Gold Technical Levels

The metal was last seen trading around $1268/Oz levels. A break above $1274.09 (previous day’s high) would open doors for $1288.32 (Apr 21 high) and $1295 (Apr 17 high). On the downside, break below $1266.58 (5-DMA) could yield a pullback to $$1261 (10-DMA) and $1256.82 (50-DMA).

Take note of the bullish crossover between 100-DMA and 200-DMA. The daily RSI is flat lined above 50.00 levels, while the MACD bars are no longer gaining altitude, signalling loss of bullish momentum.