What Happened
The US Dollar surged to a two-week high on Friday during the European session, pushing key currency pairs sharply lower. While USD/CHF is not a direct ASX focus, broad USD strength has significant knock-on effects for Australian traders โ particularly for gold (XAU/USD), iron ore pricing, and the AUD/USD exchange rate which directly impacts ASX earnings.
Key Levels to Watch
For Gold (XAU/USD), USD strength is applying downward pressure. Key support sits at $3,180 and $3,120. Resistance levels to watch are $3,250 and $3,300. A sustained break below $3,180 would signal a deeper pullback.
For the ASX 200, current support is at 8,150 and 8,080, with resistance at 8,300 and 8,380. A firmer USD typically weighs on commodity-linked ASX heavyweights like BHP and RIO.
Technical Picture
The US Dollar Index (DXY) is trending higher on the short-term timeframe, reclaiming ground lost earlier in May. Gold remains in a broader uptrend on the weekly chart but is showing signs of short-term exhaustion after its recent record run. The RSI on gold’s daily chart has pulled back from overbought territory (above 70) toward a neutral reading near 55, suggesting room for further consolidation before the next directional move.
What Traders Are Watching
Australian traders should keep a close eye on gold holding above $3,180 โ a break below this level could drag BHP, RIO, and gold miners like Northern Star lower on the ASX. Watch whether the ASX 200 can defend 8,150 into the weekly close. If USD strength continues into next week, expect pressure on commodity prices and potential AUD weakness, which could benefit ASX exporters but squeeze import-heavy businesses.
Bias
Neutral to mildly bearish for gold and commodity-linked ASX stocks in the short term. The USD’s bullish momentum is the key headwind. However, the broader trend for gold remains intact above $3,120, and any USD pullback could quickly reignite buying interest.
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