Gold In Correction On Weaker USD As Fed’s July Decision Awaited

Gold Price s correcting the weekly and daily impulses. The focus is on the US dollar’s performance and the future path of the Federal Reserve in response to latest inflation-linked data. The 50% mean reversion and a 38.2% Fibonacci retracement are brought into focus.

At $1709 to $1711, gold price has been attempting to correct as the US dollar slightly pulled back as markets weigh the expectations of a 75-basis-point interest rate hike over a 100bp hike by the FOMC meeting scheduled on July 26-27.

The American currency lost some of its long-lasting shine to trade back below 107 on Monday as per the dollar Index which measures the greenback versus rival currencies. It was trading as high as 109.29 in a fresh bull cycle high last week.

Overall, both the technical and fundamental bias has been to the downside but a correction is in play in both the US dollar and gold. To date, within gold’s bear cycle, the break in daily market structure and prospects of a strong US dollar as well as higher yields, which gold does not offer to investors, have weighed on the precious metal into pre-pandemic levels.