On Wednesday, May 20th, during the Asian trading session, the spot gold price maintained its downward trajectory. The lack of progress in reopening the Strait of Hormuz continues to fuel inflation concerns and bolster bets on potential interest rate hikes by global central banks. In early Asian trading on Wednesday, the gold price once dropped to $4,453.37 per ounce, marking an intraday decline of over $28.
Former U.S. President Trump stated on Tuesday that the United States might need to take military action against Iran again, revealing that he was just one hour away from ordering an attack before calling it off. Trump told reporters at the White House, "Today, I was one hour away from ordering an attack." He added that Iranian leaders are pleading for a deal, but if an agreement cannot be reached, the U.S. will launch another attack within the coming days.
We observe that real interest rates are rising in many countries worldwide, which indeed constitutes the primary pressure on gold. A stronger U.S. dollar is also a negative factor.
From a daily chart perspective, the moving averages are arranged in a bearish pattern, with the gold price consistently trading below these averages and continuing its decline. This indicates that the bearish trend structure remains intact, and any rebounds are merely corrective moves. The 5-day and 10-day moving averages have formed a death cross and continue to diverge downwards, suggesting strong short-term bearish pressure. Intraday focus will be on the resistance effect of the 5-day moving average, currently positioned around $4,550. As long as the gold price fails to break above this level, the overall trading bias should remain cautiously bearish.
On the 4-hour chart, gold is exhibiting a pattern of fluctuating declines, characterized by repeated attempts to probe higher followed by pullbacks. As the highs of these rebounds progressively lower, it signals a gradual weakening of upward momentum in the short term. This pattern can also be interpreted as a consolidation phase preceding further declines. The current structure is one of a consolidating downtrend, not an extremely weak, one-sided bear market. Overall, tonight's gold trading is recommended to be approached with a bearish bias amid expected volatility.
Evening Gold Trading Strategy: Strategy: Consider short positions above $4,482-4,484, with a stop-loss at $4,505, targeting around $4,420.
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