Gold: corrective rally remains elusive despite dovish Fed

• Gold (XAU/USD) looks set for a corrective rally to $1,302, the technical charts indicate.
• Dovish Fed fails to put a bid under the yellow metal.

The multiple long-tailed daily doji candles and a strong bullish price relative strength index (RSI) divergence in the 4-hour chart indicates scope for a corrective rally in gold (XAU/USD) to $1,302 levels.

However, the yellow metal continues to have a tough time scaling the resistance offered by the descending (bearish) 50-candle moving average (MA) in the 4-hour chart, currently seen at $1,295.

Gold fails to cheer dovish Fed

The Fed minutes released yesterday used the word “symmetric” nine times in reference to inflation, indicating the policymakers would allow inflation to run above the 2 percent target for some time. Further, the minutes warned about the negative impact of Trump administration's get-tough trade policy.

The dollar index (DXY) retreated from 94.19 to 93.86 in response to dovish Fed minutes. Meanwhile, the 10-year treasury yield fell below 3 percent. Still, the metal failed to catch a bid, which is usually the case when the bearish sentiment is strong.

Gold Technical Levels

As of writing, gold is trading at $1,295/Oz. The resistance is seen at$1,297 (10-day MA), $1,300 (psychological hurdle), and $1,307 (200-day MA). Meanwhile, support is lined up at $1,293 (5-day MA), $1,287 (previous day's low), and $1,282 (May 21 low).