Gold Rebounds as Dollar Softens Ahead of FOMC Minutes

Gold prices have recovered from their weekly low as the US dollar softened ahead of the release of FOMC Minutes. The yellow metal climbed above $4,350 in the last hour after touching its lowest level during the Asian session on Wednesday. The US dollar has stalled its goodish recovery from a two-month low, which has helped gold reverse some of its previous day's heavy losses.

Traders are waiting for more cues about the Federal Reserve's future policy path before placing fresh bets on gold. The focus remains on the release of FOMC Minutes amid inflationary jitters stemming from rising energy prices due to the Middle East crisis. Crude oil prices have climbed to a nearly three-week high amid the US-Iran standoff over the Strait of Hormuz.

Analysts at ING highlight that higher energy prices and rising 30-year Treasury yields are providing near-term support for the dollar, which could put a September hike from the Fed back on the agenda. The bank notes that higher energy is a dollar positive due to US energy independence and the Fed's reaction function.

From a technical perspective, gold remains well below its 200-day Simple Moving Average (SMA) and struggling to find acceptance above the 50% retracement level of the April-June decline. The Moving Average Convergence Divergence (MACD) remains above zero, but it has slipped back toward the signal, suggesting that bullish momentum is still present but vulnerable to further corrective pressure.