On Thursday, May 21, spot gold opened with sideways movement in the early Asian session, followed by a rise and a slight subsequent decline, currently trading near $4,540. In the previous session, the market opened at $4,481, initially climbed to $4,509, then experienced a rapid pullback. The daily low reached $4,453 before a strong rally during the U.S. session pushed prices to a daily high of $4,552. The session concluded with a close at $4,543, forming a large bullish candlestick with a very long lower wick.
Fundamental Factors: Geopolitical Situation: Former U.S. President Donald Trump stated publicly that negotiations between the U.S. and Iran have entered a "final phase." He commented on the situation, noting that "subsequent developments remain to be seen," and indicated that the parties would either reach an agreement or the U.S. would take some strong measures, though he expressed hope it would not come to that. While Iran maintained a tough stance, accusing the U.S. of preparing new attacks and emphasizing it would continue negotiations with "strong distrust" of the U.S. while firmly safeguarding its national interests, it also signaled willingness to cooperate with countries like Oman to ensure the security of shipping in the Strait of Hormuz.
Crude Oil and U.S. Dollar: Oil prices fell nearly 5% on Wednesday. Brent crude closed down 4.89% at $102.2 per barrel, while WTI crude closed down 4.77% at $102.5 per barrel. The U.S. Dollar Index retreated from a six-week high on Wednesday, falling 0.17% to 99.14. Notably, two large Chinese oil tankers carrying approximately 4 million barrels of crude oil successfully transited the Strait of Hormuz on Wednesday. Iran had previously agreed to ease restrictions on Chinese vessels. Although the number of transiting vessels remains significantly below the pre-conflict daily average of about 140, it has doubled compared to the previous week. These specific, incremental developments have allowed capital markets to sense the possibility of the conflict easing.
Key Events for the Day: At 20:30 GMT, the U.S. will release its Initial Jobless Claims for the week ending May 16. Market expectations are for 210,000 new claims, compared to the previous reading of 211,000. Also due are U.S. Housing Starts and Building Permits for April. At 21:45 GMT, the U.S. will release the preliminary S&P Global Manufacturing PMI for May, with a market expectation of 53.8 (previous: 54.5), and the preliminary S&P Global Services PMI for May, with a market expectation of 51.1 (previous: 51.0).
Technical Analysis: From the daily chart perspective, gold's bullish close yesterday suggests a temporary halt in the decline. The strength of the bullish candlestick, which rebounded directly near the 10-day moving average, was somewhat unexpected. With the price currently above the 5-day moving average and influenced by expectations of eased U.S.-Iran tensions, gold may continue its relatively strong performance today. Initial upside resistance can be observed near the recent high around $4,590, with the main resistance area expected around the convergence of the 10-day and 20-day moving averages near $4,620. On the downside, support is seen in the lower range of $4,480-$4,460.
Looking at the 1-hour chart, gold has now moved above and stabilized past the previous breakdown point at $4,530. While the early session shows some continuation, the upward momentum has not significantly expanded. Intraday resistance is first observed near the recent highs around $4,580-$4,590. If this level holds, the hourly chart structure could potentially form a head-and-shoulders bottom pattern. A break above this level, possibly influenced by news developments, could lead to a continuation of the short-term bullish trend. On the downside, watch for a retest of the $4,520-$4,510 area. As long as the price holds above $4,500, a bullish consolidation bias can be maintained.
Trading Recommendations for Today: For long positions, consider a short-term buy if the price retreats to the $4,520-$4,510 area during the day. Place a manual stop-loss below $4,500. Targets can be set at $4,550/$4,560 and $4,580/$4,590 for partial profit-taking. For short positions, consider a light short position if the price rebounds to the $4,580-$4,590 area during the day. Place a stop-loss above $4,600. The target is around $4,530-$4,520 for partial profit-taking.
Comments