Gold dips below 100-HMA, focus on Fed

• Gold dips below key average, pausing corrective rally from the previous week’s low of $1,266.
• The stalled recovery rally will likely gather traction if the Fed sounds dovish.

Gold (XAU/USD) fell below the 100-hour moving average (HMA) a few minutes before press time, weakening the case for a stronger corrective rally toward $1,300.

The yellow metal had dropped to a low of $1,266 last Tuesday on upbeat US data releases. The selling pressure, however, ebbed, allowing a corrective bounce following the release of the US first quarter GDP report, which showed a slowdown in consumer spending – the main engine of the US economy.

So far, however, the follow-through to Friday’s corrective bounce to $1,288 has been anything but bullish.

In fact, indecision seems to have crept into the market. This is evident from the fact that prices dropped 0.47% on Monday only to rise 0.30% on Tuesday.

As of writing, the yellow metal is trading at $1,280 per Oz and the 100-HMA is seen at $1,281.

The stalled corrective bounce could again gather steam if the US Fed talks rate cuts, although that looks unlikely, courtesy of sustained labor market strength and record highs in stocks.

Pivot points