Gold prices exhibited a range-bound pattern yesterday. The session began with a decline during Asian trading hours, falling below the $4300 level to a low of $4268. A short position entered at $4315 was closed for a profit at $4260, securing a gain of approximately $50. However, prices stabilized and moved higher during European and U.S. sessions, recovering losses and fluctuating above $4300 again. The metal ultimately closed at $4329, forming a small bullish doji candlestick on the daily chart.
Key Factors Influencing the Market
On Tuesday, following calls from former U.S. President Trump, Iran and Israel agreed to halt attacks on each other, marking the first cessation of hostilities between them since April. The two sides have found a form of "tacit understanding" through cycles of conflict and pause, seeking to avoid escalation while remaining unwilling to concede ground. Markets have become largely desensitized to this kind of "verbal optimism," and as a result, gold is not expected to gain significant upward momentum from this development.
The primary pressure on gold prices stems from ongoing expectations for interest rate hikes. Data from the CME Group shows the probability of the Federal Reserve raising rates by at least 25 basis points before December has climbed to 71.3%. Recent hawkish commentary from several Fed officials, including Governor Waller's explicit support for removing language about potential rate cuts from policy statements, reinforces this view. Consequently, the current environment is bearish for gold but not excessively so.
Technical Analysis Perspective
From a technical standpoint, while gold saw a recovery during the European and U.S. sessions yesterday, the momentum was not particularly strong. The upper boundary of the hourly chart range near $4350 has once again formed short-term resistance. The price consolidation in the latter part of the session indicates that the underlying weak trend remains difficult to alter. The recent rebound appears to be a technical correction from oversold conditions, insufficient in scale to reverse the prevailing downtrend. Based on the hourly chart structure, gold is likely to trade in a range today. Resistance is expected near the range high of $4350, with the previous low around $4365 acting as a key pressure zone that could determine the short-term direction. On the downside, initial support lies in the $4310-$4300 area. A break below this could lead to a test of the range lower boundary near $4280.
Trading Strategy and Outlook
In summary, gold currently finds itself in a difficult position, lacking clear directional conviction. The 71.3% probability of a Fed rate hike looms overhead, while geopolitical developments are failing to provide substantial support. In such an environment, a cautious approach of observing more and trading less can be profitable—by preserving capital. Major market participants are likely waiting for key U.S. economic data due later in the week. Therefore, the recommended strategy is to execute quick trades without holding positions for too long, as the risk of being whipsawed by volatile moves is high. It is advisable to avoid holding large overnight positions ahead of the CPI data release. Waiting for greater clarity is more important than trying to profit from every minor price swing.
Intraday Trading Recommendations
Gold: Consider trading within the $4355-$4260 range. Use a 10-point stop-loss and target profits of 60-70 points.
Major Economic Data and Events to Watch Today
20:15 U.S. ADP National Employment Report (Weekly Change for week ending May 23)
20:30 U.S. Trade Balance for April
22:00 U.S. Existing Home Sales (Annualized Rate) for May
22:00 U.S. Wholesale Inventories Monthly Rate for April
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