On Thursday, June 18, in early Asian trading, spot gold experienced a recovery following a sharp decline around 2 a.m., currently trading near $4,310.
Yesterday, the gold market opened at $4,331, initially rose to $4,350 before falling back to $4,318. It then slowly climbed to $4,382 by the early morning hours before a strong retreat influenced by the Federal Reserve's interest rate decision.
The daily low reached $4,218 before consolidation, with the session finally closing at $4,257, forming a large bearish candlestick with an upper shadow slightly longer than the lower shadow.
Key Drivers
The market was focused on the Federal Reserve's decision announced at 2 a.m. this morning, which kept interest rates unchanged at 3.5%-3.75%, marking the fourth consecutive pause.
The committee unanimously agreed on this decision. However, the officials' latest quarterly economic projections revealed a significant shift in policy stance: among the 19 participating officials, 9 anticipate at least one rate hike by year-end, whereas in March, no officials projected a hike.
Only one official expects a rate cut this year, down sharply from 12 officials in March. Coupled with hawkish commentary from Chairman Powell's press conference and the announcement of forming five working groups to reform the Fed—including major adjustments to communication methods like post-meeting press conferences and the dot plot—gold prices fell sharply in response.
On the geopolitical front, the presidents of the United States and Iran signed an electronic memorandum of understanding, with both governments releasing a 14-point text largely consistent with earlier media reports.
However, Iranian Foreign Ministry spokesman Baghaei stated that the planned U.S.-Iran talks in Switzerland on Friday, June 19, are now "uncertain."
The U.S. EIA Strategic Petroleum Reserve inventory for the week ending June 12 hit its lowest level since the week of July 29, 1983, with stocks at the largest U.S. oil storage hub plummeting to critically low levels.
Regarding data, the U.S. dollar surged on Wednesday, extending gains after the rate decision, with the dollar index rising 0.84% to 100.38.
For dollar-denominated gold, a stronger dollar makes it more expensive for overseas buyers, directly suppressing demand. Key data for today includes the Bank of England's interest rate decision and meeting minutes at 19:00 GMT, and U.S. initial jobless claims for the week ending June 13 at 20:30 GMT.
Technical Perspective
Looking at the daily chart for gold, relying solely on its own technical strength, it remains difficult for the price to sustain above the 5- and 10-day moving averages. Unless market sentiment shifts again due to news and the U.S. dollar continues to adjust, gold may gain sustained upward momentum, though it will still face resistance near the 20-day moving average around $4,380.
Given the current market sentiment, expectations for a future Fed rate hike are highly likely. A strengthening dollar suggests gold will likely trend weaker with oscillations, and there remains a high probability of a later decline towards the lower boundary of the daily range near $4,100.
Examining the one-hour chart, the rebound in the morning session can be seen as a technical retracement to confirm resistance levels. Focus initially on the test and struggle around the $4,320/30 zone.
If the price holds above this level, then watch the resistance at $4,360/80, although this scenario is less probable. Comparing the movement patterns of the dollar index and gold, the morning rebound in gold also appears driven by somewhat excessive sentiment.
Therefore, the main intraday strategy remains to watch for corrective declines, with the morning rebound potentially viewed as creating room for such a downward adjustment.
Intraday, continue to monitor the battle around the 5- and 10-day moving averages at $4,280/60. On the hourly chart, a retest of Monday's gap area around $4,270/40 remains key. For the remaining two trading days this week, the price must fall back below this gap to better support a bearish adjustment view.
Trading Strategy for Today
Consider a light short position if gold rebounds again to the $4,320/30 area, with a manual stop-loss above $4,335. Initial target for partial profit-taking is around $4,300, with remaining positions held to see if the price moves towards the $4,270/50 zone before exiting.
If the price intraday sustains above $4,330, adopt a wait-and-see approach, avoid new short positions, and certainly do not chase longs. Observe the struggle around $4,350/60 and even $4,380, and assess based on actual conditions whether to consider another light short position.
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