Gold Slips as Dollar Strengthens, Key U.S. Data Looms

Market Overview

In early Asian trading on Wednesday (May 28), spot gold showed mild fluctuations, hovering near $3,305 per ounce. During the previous session, gold briefly dipped below the critical $3,300 psychological level, hitting a low of $3,285.25 before closing at $3,300—down 1.25% on the day. The sharp pullback, particularly after last week's nearly 5% rally, rattled the markets. The decline was largely driven by a stronger U.S. dollar, which advanced against multiple currencies—most notably rising 1% versus the Japanese yen—making dollar-priced gold more expensive for holders of other currencies and dampening demand. Looking ahead, investors are bracing for a slew of key macro data including the FOMC meeting minutes, revised U.S. GDP, weekly jobless claims, and the core PCE price index—all of which could heavily influence golds next move.

Hot Topics to Watch

● Mixed U.S. Economic Signals

Tuesday‘s U.S. economic data delivered conflicting messages. The Conference Board’s Consumer Confidence Index for May unexpectedly surged 14.4%, far exceeding economists forecasts and injecting renewed optimism into risk markets. Conversely, core durable goods orders for April posted their steepest decline in six months, pointing to a sharp slowdown in business equipment spending at the start of Q2. These mixed signals underscore the fragile and nuanced state of the U.S. economy.

● Sharp Rebound in Japanese Bonds

Ahead of a 40-year government bond auction, Japan‘s Ministry of Finance reportedly sent a questionnaire to market participants, gauging opinions on the appropriate issuance volume and soliciting feedback on current market conditions. Yields on Japan’s 20-year bonds dropped by 17.5 basis points, sparking renewed interest. All eyes are now on Wednesdays 40-year JGB auction. A weak showing could push yields even higher, triggering a selloff cycle; on the other hand, strong demand could offer a short-term reprieve. Still, with underlying structural imbalances in supply and demand unresolved, any technical bounce may prove temporary.

Key Events to Watch

• 22:00 GMT+8 – U.S. Richmond Fed Manufacturing Index (May)

• 02:00 GMT+8 (next day) – FOMC Meeting Minutes Release (May)