On Friday, June 26th, spot gold traded sideways in early Asian hours before turning lower, unable to hold onto gains from the previous evening and is currently trading around $3,990.
Yesterday, the gold market opened at $4,006. The price initially fell to a low of $3,963 before staging a volatile rebound. During the US session, it reached a high of $4,044 before consolidating and finally closing at $4,026. The daily candle formed a bullish hammer with a very long lower shadow.
The US Commerce Department reported that the May Personal Consumption Expenditures (PCE) price index rose 4.1% year-over-year, marking the highest level since April 2023 and the first time in over three years it has breached the 4.0% threshold. The core PCE index increased 3.4% year-over-year, with the monthly performance largely in line with market expectations.
Key Market Drivers
Geopolitical Factors
On the geopolitical front, Iran's "Persian Gulf Strait Authority" warned vessels against using unauthorized sea lanes in the Strait of Hormuz. The Iranian Revolutionary Guard cautioned that uncoordinated passage through the strait is "unacceptable and dangerous." The International Maritime Organization has suspended the evacuation of vessels stranded in the Strait of Hormuz. US media, citing US officials, reported that Iran attacked a Singapore-flagged cargo ship in the Strait of Hormuz on Thursday. A source close to the negotiation team stated that Israel's withdrawal from Lebanese territory is one of the conditions for a final agreement between Iran and the US, considered an important "red line" by the Iranian negotiating team. The source further indicated that a final memorandum of understanding would safeguard Lebanon's sovereignty and territorial integrity.
Federal Reserve Commentary
Regarding the Federal Reserve, New York Fed President John Williams stated he expects inflationary pressures to ease but pushed back the timeline for achieving the 2% inflation target to 2028. Chicago Fed President Austan Goolsbee noted that underlying inflation remains too high and its trajectory is unfavorable, agreeing with former Fed Governor Kevin Warsh's view that the Fed should avoid fueling speculation about future interest rates. A ruling on the case involving Fed Governor Lisa Cook is expected to be announced next week.
Economic Data
In terms of data, oil prices closed over 2% higher on Thursday, with Brent crude up 2.39% and US crude up 2.19%. This followed an attack by an unidentified projectile on a cargo ship near Oman (later revealed by two US officials to be fire from Iran), raising market concerns about the outlook for Middle East oil supply restoration. The US Dollar Index fell 0.1% to 101.45 on Thursday, ending a three-day winning streak. First-quarter GDP growth was revised up from 1.6% to 2.1%.
Technical Analysis
Looking at the daily chart structure, gold has declined to the key $4,000 level. Although it briefly pierced this level, a battle for control ensued as expected, without a significant breakdown. While the price has rebounded, the magnitude of the move on the daily chart is still far from sufficient. Therefore, the medium to long-term bearish correction trend in gold may still have room to extend. In the short term, focus on resistance near the 5-day moving average around $4,070. Stronger resistance is expected near the 10-day moving average, currently around $4,160, though this level may potentially shift down to the $4,130-$4,120 area over time.
Analyzing the one-hour chart, although gold rebounded overnight due to the temporary impact of US data, the rebound's magnitude is insufficient to alter the overall weak structure. However, the short-term price action may temporarily halt the decline and transition into a low-level consolidation phase. Intraday, focus on resistance near the upper boundary of the hourly chart's range around $4,050. Primary attention should remain on the battle around the $4,020-$4,010 zone. On the downside, watch for a test of the lower boundary of the hourly chart's range near $3,970.
Today's Trading Strategy
For intraday trading, a very light short position in gold can be considered on a rebound to the $4,045-$4,050 area, with a stop-loss set above $4,055. The initial target is $4,020-$4,010, where a portion can be taken off and the stop-loss moved to breakeven. The remaining position can target the $4,040-$4,050 area. A very light long position can be considered on a pullback to the $3,980-$3,970 area, with a stop-loss set below $3,960. The initial target is $4,000-$4,010, where a portion can be taken off and the stop-loss moved to breakeven. The remaining position can target the $4,040-$4,050 area. If the price breaks out of the $4,050–$3,960 range during the session, adjust the strategy accordingly based on the actual market conditions.
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