On May 15th, a notable shift in expectations regarding Federal Reserve monetary policy has intensified the downward pressure on gold. As is widely known, the Middle East conflict continues to drive up energy prices, which has significantly contributed to the sharp rise in both the U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) for April. Consequently, market expectations for a Fed rate cut have diminished considerably. Current market data indicates a 53.5% probability that the Fed will maintain its current interest rate by December, while the probability of a cumulative 25-basis-point cut is a mere 1.7%. Conversely, the likelihood of at least a 25-basis-point rate hike has increased to 44.7%. This shift in data has altered the perceived direction of Fed policy, thereby changing market expectations for the future trajectories of the U.S. dollar and gold.
Furthermore, former President Trump is currently occupied with his visit to China, and there are no immediate geopolitical developments to stimulate the market. Once Trump concludes his trip and returns to the U.S., the market will analyze the implications of the U.S.-China exchange and his subsequent actions regarding Iran. Given the current timing, global financial markets may experience significant volatility next week, requiring close attention for Monday's short-term trades.
Analyzing recent gold price movements, Thursday saw overall consolidation within a narrow range, followed by an unexpected sharp decline overnight that briefly broke below the crucial support level of 4650. As previously noted, gold remains within a broad consolidation range, with no definitive long-term trend of strength or weakness. However, as long as the short-term price remains above 4650, the short-term outlook is relatively strong, with resistance around 4750-4780. A break below 4650 would indicate short-term weakness, shifting the key support zone down to 4600-4550. Earlier this week, gold stayed above 4650, maintaining a generally strong fluctuation pattern. Now, with the break below 4650, gold has shown a tendency towards weakness. Therefore, today's short-term trading requires caution against a sustained, one-sided decline.
From a technical perspective, following the decline on Thursday and into this morning, the daily chart has printed several consecutive bearish candles, breaking below the middle Bollinger Band. The focus now shifts to the space between the middle and lower Bollinger Bands, with 4500 being a crucial long-term support level. On the 4-hour chart, this decline has also expanded the lower Bollinger Band. With the bands now widening, the technical structure appears particularly weak. In such a bearish environment, trading strategies must adapt. Previously, trading both long and short positions was viable between strong support and resistance. However, with the price now falling below a key support level, the approach is to observe whether the new low holds, initially considering a rebound from the lower key support. It is crucial to note that market conditions are volatile; even when considering a rebound from key support, one must closely monitor whether that support level can hold. This morning, gold fell to near 4600 and entered a weak consolidation phase. From the current short-term cycle perspective, immediate resistance for any rebound lies at 4635 and 4650. Trading decisions should be made based on the actual strength of any price rebound. Given that today is Friday, special attention is warranted: if gold experiences a strong reversal with significant upward momentum, reclaiming and holding above 4650, it could potentially signal a resumption of the uptrend.
Today's Short-Term Trading Level References: 1. Considering the current price, use the support near 4610 to initially attempt a long position targeting a rebound. Place a stop-loss below 4595 to guard against another one-sided decline. The initial target for the long position is the strong resistance zone of 4635-4650, with a key focus on whether the price can break and hold above 4650. 2. If the rebound during the day lacks strength, expect continued weak consolidation within the 4600-4650 range. Short-term trading can focus on both long and short opportunities within this range. However, a break below 4600 would suggest a continuation of the bearish trend, with the next support level at 4550. Conversely, if the price stages a strong bullish reversal, breaking and holding above the 4650 level, monitor for signs of bullish stabilization, with the next resistance levels at the previous 4680 and 4700 marks.
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