May 18: In the gold market last week, international gold prices encountered resistance, retreated, and closed lower. This was due to a combination of factors including technical resistance, a stronger US dollar buoyed by optimistic expectations for US-China talks, rising US Treasury yields, inflation data exceeding expectations which dampened prospects for Federal Reserve rate cuts, unresolved geopolitical tensions in the Strait driving oil prices higher, and shrinking physical demand from India.
The price failed to break through the mid-Bollinger Band resistance and fell below the 30-week moving average again by the close, indicating increased bearish momentum. This suggests a continued risk of a downward correction towards $4400 or $4100 per ounce, or even lower levels.
Specifically, gold opened the week lower at $4683.82 per ounce, initially strengthened to reach the weekly high of $4773.29 on Tuesday, then faced resistance and retreated, declining consecutively. Bearish pressure intensified on Friday, pushing the price through support levels to touch the low of the previous two weeks at $4511.93, before finally closing at $4540.79. The weekly range was $261.36, representing a decline of $175.6 or 3.72% from the previous week's close of $4716.39.
Looking ahead to Monday (May 18): International gold opened with a slight stabilizing rebound. However, as it remains below technical resistance, and with geopolitical tensions persisting—evidenced by US military threats towards Iran and discussions between the US and Israel on potential military action, increasing the risk of joint airstrikes—the Strait issue remains deadlocked. This boosts the bullish outlook for crude oil, potentially reigniting inflationary pressures, which will continue to weigh on gold prices. Therefore, the short-term trend for gold is expected to remain weak, awaiting a retest of the 200-day moving average support target.
Intraday focus will be on the US May NAHB Housing Market Index data, with market expectations leaning towards a negative impact on gold. Furthermore, a series of US economic data releases this week are generally expected to be negative for gold. Combined with the technical outlook, the strategy for gold this week remains biased towards looking for selling opportunities on rallies.
Fundamentally, a broad surge in US inflation data, with several key indicators hitting multi-year highs, has led Federal Reserve officials to suggest that interest rate hikes might be necessary if inflationary pressures persist. Traders have largely priced out Fed rate cuts for this year, while bets on a potential rate hike have increased. Simultaneously, gold is pressured by the optimistic prospects for relations between the two major economies, geopolitical energy shocks and demand-side policy shifts, a global bond sell-off wave, and a sharp spike in the US 10-year Treasury yield. These factors collectively drive gold prices lower, maintaining near-term adjustment pressure.
While from a medium to long-term perspective, global geopolitical uncertainty, continued central bank gold purchases, de-dollarization trends, and potential economic slowdown risks provide structural support for gold, a return to normal bullish support likely requires a gradual decline in inflation and a moderation of geopolitical risks. Otherwise, a phase of correction could erode and wear down most bullish holders.
If measured against the approximate 20–22% decline seen in 2022–2023, the recent low of $4099 may represent a sufficient or even excessive adjustment, suggesting a potential phase of bottoming and consolidation before a recovery.
If measured against the roughly 40% adjustment seen during the 2008 financial crisis or the 2011–2015 period, a further decline to around $3800 or $3500 might be needed to form a bottom.
Alternatively, considering the scenario of the early 1980s when the Fed raised rates to nearly 20% to curb inflation, causing real rates to soar and the dollar to strengthen, leading to a gold price drop of about 65%, gold could potentially fall below $3000. However, the probability of this scenario is currently considered low. The first two scenarios are more likely.
Therefore, strategically, a light position could be initiated around $4400, with further additions around $3800, followed by patient waiting for new highs to emerge.
For accumulated gold products or physical gold holdings, hedging with futures could be an option to lock in risk or reduce losses, awaiting a clearer bottom before further positioning.
International gold investors, however, need not focus solely on direction; trading both long and short positions based on intraday or weekly market movements is viable.
Technically, on the monthly chart, gold has been oscillating below the 5-month and 10-month moving averages since April through May, showing a weak bias. A rebound above the 5-month moving average could strengthen bullish momentum for a retest of $5200. A break below the 10-week moving average support could lead to a further decline towards the $4100 or even $3800 levels.
On the weekly chart, gold has repeatedly faced resistance at the mid-Bollinger Band and has fallen below the 30-week moving average again, indicating increased bearish momentum. A short-term decline towards the $4400 or $4100 levels is possible. Resistance at the mid-Bollinger Band remains key; until it is broken, the bias is towards adjustment.
On the daily chart, after encountering resistance at the 100-day moving average, gold has retreated consecutively, falling below the short-term moving averages and the mid-Bollinger Band. Bearish momentum has increased, suggesting a potential short-term decline towards or below the $4400 level, where buying interest might be tested. On the upside, resistance at various moving averages presents selling opportunities.
For specific intraday trading guidance, refer to real-time account information.
Preliminary intraday trading level references are as follows (specific entry and exit points subject to real-time account notifications): Gold: Support levels to watch are around $4490 or $4390; Resistance levels are around $4590 or $4630. Silver: Support levels to watch are around $74.25 or $71.75; Resistance levels are around $77.70 or $80.30.
Comments