Last week (May 18-24), the international spot gold price closed lower by $31.35, a decline of 0.69%, marking its second consecutive week of losses. Analysis indicates that the twists and turns in US-Iran negotiations have kept market participants highly vigilant regarding global inflation. Simultaneously, the official commencement of the 'Warsh era' and persistent expectations of a hawkish Federal Reserve policy have continued to suppress bullish sentiment in the gold market. However, with positive signals emerging from the US-Iran talks over the weekend, a short-term rebound in gold prices is possible.
Looking ahead to the new week, US-Iran negotiations remain a key market variable. Regarding interest rate expectations, the market will focus on speeches from several Federal Reserve officials this week for signals on monetary policy. Additionally, market attention will shift to the US core PCE price index for April. If the core PCE growth rate exceeds market expectations, gold prices could face further downward pressure. Conversely, if the PCE data falls short of expectations, gold may experience a technical rebound.
US-Iran Negotiations Cause Fluctuations; Gold Unlikely to See Sustained Uptrend Developments in the Middle East situation, particularly news related to US-Iran negotiations, were the primary drivers of volatility in the gold market last week. Positive signals regarding the talks, especially in the latter half of the week, provided significant support for the short-term stabilization and rebound in gold prices from the $4,500 level.
US Secretary of State Rubio stated on the 21st that some progress had been made in negotiations with Iran, but he could not guarantee an agreement would be reached. He also noted that if a 'good deal' could not be achieved, 'everyone knows' what other options the US possesses.
President Trump claimed on the 23rd that an agreement with Iran, including the opening of the Strait of Hormuz, had been 'largely negotiated' and was awaiting finalization by both sides and relevant countries. Iranian Foreign Ministry spokesperson Baghaei said on the 23rd that Iran and the US were working to finalize a memorandum of understanding. However, based on messages from various parties, significant differences remain between the US and Iran on issues such as Iran abandoning its stockpile of highly enriched uranium and opening the Strait of Hormuz.
The Washington Post reported further on the 24th that the US and Iran had agreed on a framework for a memorandum of understanding. Once signed, shipping through the Strait of Hormuz would be fully restored within 30 days. The report cited an anonymous senior US official stating that the two countries had developed a 'framework' for a memorandum, including extending a ceasefire for 60 days to allow both sides to reach a 'final agreement' on permanently ending the conflict in Iran. During this period, the Strait of Hormuz would undergo mine clearance and be reopened. Influenced by this news, international oil prices fell significantly in late trading on the 24th Eastern Time as the new week's trading began, with declines at one point exceeding 5%.
However, differences between the US and Iran persist. On the 23rd, two US officials told The New York Times that the agreement did not resolve the issue of how Iran would abandon its enriched uranium stockpile, leaving specific details to be addressed in the next phase of negotiations on Iran's nuclear program. Baghaei also stated on the 23rd that the current stage of negotiations does not involve nuclear issues or the specific details of corresponding sanctions relief. Regarding the Strait of Hormuz, Baghaei indicated that the issue 'has nothing to do with the United States' and is a matter between Iran and coastal states. Iran is continuing to advance cooperation with Oman on the Strait of Hormuz issue. Iran's Fars News Agency reported on the 24th that Trump's latest social media statement about 'the Strait of Hormuz will open' was 'incomplete'.
Amid the turbulent backdrop of US-Iran negotiation-related information last week, spot gold rebounded after falling below the $4,500 mark, but the sustainability of this rebound is key. Overall, gold is expected to remain in a range-bound pattern. A sustained uptrend is unlikely before a breakthrough in the Middle East situation.
Fed Enters 'Warsh Era'; Traders Begin Pricing in Rate Hike This Year Regarding Federal Reserve monetary policy, on the afternoon of May 22 local time, the swearing-in ceremony for the new Federal Reserve Chairman, Kevin Warsh, was held at the White House, presided over by President Trump. Although Warsh pledged to uphold the principle of independence in his duties, focusing fully on stabilizing prices, promoting employment, and advancing institutional reform, the White House's special attention to this Federal Reserve has also sparked market speculation.
Simultaneously, the minutes from the Federal Reserve's April meeting released last week showed that most Fed officials judged that the disinflation cycle would be prolonged, and if prices remain elevated, the possibility of subsequent rate hikes exists. The Middle East situation has disrupted energy supply chains, and rising prices across multiple sectors continue to fuel inflationary pressures.
Overall, the Federal Reserve's policy stance has shifted hawkish at this stage. Several officials have expressed a preference for maintaining high interest rates for an extended period, and the previously dovish stance has also become more cautious.
Against this backdrop, money market information indicates that the probability of a Federal Reserve rate hike before the end of the year is rising. According to the CME 'FedWatch Tool', the probability of the Fed maintaining rates unchanged in June is 97.3%. Derivative market traders, however, estimate the probability of a rate hike before December to be around 60%.
In the new week, several Federal Reserve officials will also deliver public speeches. Investors will continue to search for signals regarding the future direction of interest rate policy from these remarks. At the same time, market focus will shift to the US core PCE price index for April. If the core PCE growth rate exceeds market expectations, it may suggest that price pressures are spreading to a broader range of the economy. In that case, market bets on the Fed's hawkish policy outlook could strengthen, likely further pressuring gold prices. Conversely, if the PCE data falls short of expectations, gold may see a technical rebound.
While the macroeconomic and policy landscape cannot provide clear signals for the time being, technically, gold prices continue to be trapped in a range-bound phase. The 200-day moving average and the October moving average in the 4385-4375 area serve as key support below, while the 60-day and 100-day moving averages in the 4730-4800 area act as key resistance above. Short-term resistance for gold prices is expected in the $4580-4600 per ounce region, with key resistance in the $4680-4730 per ounce region. Short-term support lies in the $4530-4500 per ounce region, with key support in the $4400-4370 per ounce region.
For Shanghai gold, short-term resistance is in the 1000-1030 yuan per gram region, with key pressure in the 1060-1080 yuan per gram region. Support lies in the 980-960 yuan per gram region, with key support in the 950-920 yuan per gram region. For Shanghai silver, resistance is in the 19500-20500 yuan per kilogram region, with key resistance in the 21500-22000 yuan per kilogram region. Support is observed in the 18500-17500 yuan per kilogram region, with key support at 17500-17000 yuan per kilogram.
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