• Gold prices have displayed exhaustion in the downtrend as the RSI (14) showed a bullish divergence.
• The anxiety over the interest rate decision by the Fed has paused the Fx domain.
• The US labor market sees 400k additions in April.

Gold Price (XAU/USD) is hovering around $1,865.00 and is likely to remain on tenterhooks as uncertainty over the announcement of the monetary policy by the Federal Reserve (Fed) has paused the whole Fx domain. The precious metal has displayed a subdued performance in the early Tokyo session and is likely to perform lackluster till the announcement of the interest rate decision.

Gold prices are going to witness a lack of attention from investors for a prolonged period as the determination of the Fed to return to neutral rates will keep pushing itself to raise interest rates sooner rather than later.  An interest rate hike by 50 basis points (bps) is on the cards but taking into consideration the multi-decade high inflation and consistency in full employment levels and wage-price hikes, one more jumbo rate hike by the Fed looks imminent.

Meanwhile, the US dollar index (DXY) is attempting to overstep 103.50 in this session. Apart from the Fed’s policy, the DXY is also focusing on the release of the US Nonfarm Payrolls (NFP), which is due on Friday. The job additions by the US administration in April are expected to land at 400k against the prior print of 431k. Also, the Unemployment Rate looks to decline to 3.5% from the previous figure of 3.6%.

Gold technical analysis

The formation of bullish divergence on an hourly scale is signaling a reversal in the downtrend.  The asset made a lower low while the momentum oscillator Relative Strength Index (RSI) (14) didn’t register a fresh low, which showed exhaustion in the downside momentum. The 50- and 200- Exponential Moving Averages (EMAs) at $1,871.63 and $1,890.96 respectively, still favor the downside. The RSI (14) is likely to find a cushion at around 40.00, which will result in a fresh bullish impulsive wave ahead.

Gold hourly chart