• Gold reversed an intraday dip to a two-week low and climbed back closer to the $1,835 level.
• Retreating US bond yields kept the USD bulls on the defensive and extended some support.
• The dismal US Q1 GDP print added to recession fears and further benefitted the safe-haven metal.
• Hawkish Fed expectations turned out to be the only factor that capped gains for the XAUUSD.

Gold attracted some dip-buying near the $1,812 region, or a two-week low touched earlier this Wednesday and rallied to a fresh daily high during the early North American session. The XAUUSD was last seen trading just below the $1,835 level, up over 0.65% for the day.

Uncertainty over the pace of rate hike by the Federal Reserve dragged the US Treasury bond yields lower and failed to assist the US dollar to capitalize on its modest intraday gains. This, along with growing recession fears, acted as a tailwind for the safe-haven gold.

Investors remain concerned that a more aggressive move by major central banks would pose challenges to the global economic recovery. The worries were further fueled by a downward revision of the US Q1 GDP, showing that the economy contracted by 1.6% against the 1.5% estimated.

That said, the overnight hawkish comments by New York Fed President John Williams and San Francisco’s Mary Daly lifted bets for a faster policy tightening. Furthermore, Fed Chair Jerome Powell said that the US economy is in strong shape and is well-positioned to handle tighter policy.

Speaking at the ECB Forum in Sintra, Powell added that our aim is to have growth moderate and there are pathways, though have gotten narrower, to get back to 2% inflation with a strong labor market. This was seen as the only factor cap gains for the non-yielding gold.

Even from a technical perspective, the recent repeated failures near the very important 200-day SMA favours bearish traders. Hence, any subsequent move could be seen as a selling opportunity and runs the risk of fizzling out rather quickly, warranting caution for bulls.

Technical levels to watch