Gold prices declined on Wednesday, falling below the $3,300 mark during the North American trading session, as investors responded to the latest Federal Reserve minutes and rising U.S. bond yields. Spot gold (XAU/USD) slipped 0.27% after reaching a daily high of $3,325.
The minutes from the Federal Reserve’s May 6–7 policy meeting revealed that officials voted to keep interest rates unchanged, citing ongoing uncertainty about the economic effects of trade tariffs. Policymakers indicated a patient stance, emphasizing that inflation and unemployment risks have risen—particularly due to the potential for stagflation, where high inflation coincides with slowing growth and weakening labor market conditions.
The Fed acknowledged the possibility of “difficult tradeoffs” ahead if inflation remains persistent while economic growth and employment deteriorate. Officials stated they would wait for clearer signs of how recent shifts in government policy—including trade tariffs—affect the broader economy. Notably, the meeting occurred before former President Trump’s decision to reduce tariffs on Chinese imports from 145% to 30%.
Gold’s recent rally has lost momentum amid a rebound in U.S. Treasury yields and a strengthening dollar. On Wednesday, the yield on the 10-year U.S. Treasury note rose 4.5 basis points to 4.493%, while real yields increased by four basis points to 2.171%. The U.S. Dollar Index (DXY) advanced 0.33% to 99.89, supported by strong consumer confidence data, which posted its largest gain in four years, according to the Conference Board.
New York Fed President John Williams noted that inflation expectations remain well-anchored but cautioned that prolonged inflation could become entrenched if not addressed.
Despite the current pullback, geopolitical tensions continue to provide support for gold’s long-term outlook. Ongoing conflicts between Russia and Ukraine, as well as renewed violence in the Middle East involving Israel and Hamas, are sustaining demand for safe-haven assets.
Goldman Sachs recently recommended a higher-than-normal allocation to gold in long-term investment portfolios. The bank cited heightened risks to U.S. institutional credibility, ongoing pressure on the Federal Reserve, and sustained central bank demand as reasons for its bullish outlook, according to Reuters.
Adding to physical demand signals, gold imports to Switzerland from the U.S. reached their highest level since at least 2012 in April. Meanwhile, China’s net gold imports via Hong Kong more than doubled from March to April, hitting their highest level since March 2024.
Looking ahead, investors will focus on the upcoming release of the second estimate for U.S. first-quarter GDP and the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.
Technical Outlook: Gold Tests Key Support
Gold has been trading within a tight $3,280–$3,330 range over the past four sessions, with bullish momentum weakening. The Relative Strength Index (RSI) is trending toward the neutral 50 line, a break below which could indicate further downside pressure.
For the uptrend to continue, gold would need to reclaim $3,300 and push beyond $3,400, with the May 7 swing high of $3,438 serving as the next resistance. A move above these levels could reopen the path to retesting the $3,500 mark.
On the downside, a drop below $3,250 could expose gold to its 50-day Simple Moving Average (SMA) at $3,211, followed by further support at the May 20 low of $3,204.
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