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USD Leads, Gold down in a Calm Session – North-American Mid-Session Update
The Greenback is the best performer in majors after the morning session, as U. of Mich. Consumer Sentiment missed, which did not move markets. Gold is down about 1.5% as last month flows keep on reverting.
USD leads a calm trading session
The Dollar has held above the 101.00 mark on its DXY Dollar Index, as markets digest calming tariff policies and President Trump eases his wrath. There is a theme of greater confidence in US foreign policies, as seen in the outperformance of US Indices in the past week; however, the confidence is relative as Trump’s appearances and quotes keep surprising markets.
Stock Indices are seen virtually unchanged on the day, as a miss on University of Michigan data failed to create any volatility. Lately, markets have been moving more toward political speeches and information on inflation. The S&P is leading U.S. indexes up a muted 0.2%, and other indexes around the globe close green, with the Nikkei closing around 0.4% and Eurostoxx up 0.22%.
Gold, up around 34% in April 21st and May 6th highs, keeps retracing. This confirms a lesser appetite for Safe-Havens, as US policies are seen as less erratic than what was expected. The Bullion is still up around 22.5% this year—a deeper look on the chart of the day right below.
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Daily Chart Insight – Gold
Gold has formed a top after a failure to break prior highs in the beginning of this month. April highs were seen at $3,500 with May 6th highs coming close at $3,435. Since, the yellow metal has been trending down and has retraced a bit less than 10% from its all-time highs.
Selling momentum has calmed a little though as positioning is further from the beginning of May extremes. Our Market Sentiment Tool scans positioning and tends to be a good indicator of extreme sentiment. It is common to take a contrarian view to current positioning, with 72% of traders net-long XAU/USD.
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XAU/USD 4h Chart. Source: TradingView
Bulls are now looking to hold the $3,100 psychological level and would be looking for a rebound towards the highs of the descending channel around $3,375. The price action from this year is nonetheless strong and looking at higher timeframes, the general outlook is still far from bearish.
Bears on the other hand are looking to pursue the acceleration in the selling, where a break below $3,100 would point towards a pivot zone between $2,950 and $3,000. The RSI is not in oversold territory after the recent bounce.
Oil off its Lows, CHF lags
After volatile whipsaws for oil prices in the past week, we are seeing WTI trading up around 1.4% as the market is now looking with more confidence toward the commodity. Trump’s visit of Middle Eastern countries also contributes to this change in sentiment.
For other majors, the USD is still leading with the Swiss Franc lagging on the other extreme. The SNB wants to make sure that their currency does not appreciate too much, which would hurt exports and their already low inflation. More on this here.
Take a look at currency performance below
Safe trades!
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Daily performance of Currency Majors. Source: OANDA Labs
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