Gold Price Analysis: XAU/USD dips back to low $1840s given bullish buck, but holding above 200DMA for now

• A bullish breakout in the buck to fresh yearly highs has seen spot gold pull back from earlier highs in the $1850s.
• But XAU/USD is finding support and remaining in the $1840s above its 200DMA amid geopolitical angst/risk-off flows.

Whilst a broad cross-market bid for safe-haven assets which has resulted in strength in the yen and in government bond prices (meaning yields are lower) is keeping spot gold (XAU/USD) prices supported above its 200-Day Moving Average in the mid-$1830s for now, a breakout to fresh year-to-date highs in the US dollar that has seen the DXY push into the upper 104.00s has seen the precious metal reverse back from earlier session highs near $1860.

XAU/USD current trades in the low $1840s and is down about 0.5% on the day as the stronger greenback makes USD-denominated commodities (like spot gold) more expensive for international buyers. Whether the buck’s bullish breakout will be enough to push gold to fresh multi-month lows below Wednesday’s $1832 bottom remains to be seen.

At the moment, US (and global yields) are on the back foot amid a safe-haven bid, and lower yields mean a lower opportunity cost of holding non-yielding assets like gold. Meanwhile, concerns about slowing global growth remain ever-present, while European markets are seemingly rattled by the latest geopolitical developments there.

Finland is on the verge of applying to join NATO with Sweden expected to follow and Russia has vowed an unspecified response. Geopolitical tensions in the region add to downside growth risks, all of which could be cited by investors as reasons to own gold. Looking ahead, the imminent release of US Producer Price Inflation figures for April will be worth noting at 1330BST, as will any further rhetoric from Fed policymakers.