On Tuesday, May 26, spot gold in the early Asian trading session saw a slight rise to $4,580 before declining. The current drop has reached 0.6%, with trading around $4,540. On Monday, May 25, gold opened higher in the morning, rising to $4,580 before facing pressure and pulling back. In the afternoon, it tested the $4,550 level for support and rebounded. In the evening, it encountered resistance at $4,577 and dropped sharply, finding a bottom at $4,553 before fluctuating and rising again. The market maintained a relatively strong performance towards the close, with highs reaching $4,577-4,578. The daily chart closed with a small bullish candle with upper and lower shadows, indicating a high-level consolidation pattern overall.
Fundamental News: The main reason for the morning drop in gold: According to a report by Fox News citing U.S. Central Command spokesperson Captain Tim Hawkins on the morning of May 26, U.S. forces conducted defensive strikes in southern Iran on Monday local time. The targets included missile launch sites and Iranian vessels attempting to lay naval mines. While maintaining restraint during the ongoing ceasefire, U.S. Central Command continues to defend U.S. military personnel.
U.S.-Iran Relations: On Monday, sources indicated that the United States and Iran are discussing a plan to open the Strait of Hormuz approximately 30 days after an agreement to end hostilities is reached between the two countries. Once an agreement is in place, Iran will clear the mines from the strait within the 30-day period. Reports also stated that the ceasefire agreement reached in early April will be extended by 60 days. During this two-month ceasefire period, both sides plan to negotiate on Iran's nuclear program. Recent news about a potential U.S.-Iran agreement has been widespread, but the current situation remains delicate. While expectations are positive, a concrete deal has yet to materialize.
Other Aspects: Former U.S. President Donald Trump stated that Iran's enriched uranium (nuclear material) will be immediately handed over to the United States for domestic disposal, or, preferably, destroyed on-site in cooperation with Iran or at another acceptable location. The International Atomic Energy Agency or an equivalent body will witness the process. Iran's Foreign Ministry responded that they will not impose tolls on the Strait of Hormuz. While it is normal to charge for services provided, this should not be considered a toll. They have established a framework, but no one can assert that an agreement between the U.S. and Iran will be reached soon.
Technical Analysis: From the daily chart structure of gold, although gold showed relative strength yesterday, it repeatedly tested the $4,580 level without breaking through. Currently, the price is pressured by the 10-day moving average and has retreated back near the 5-day moving average. If the impact of fundamentals is not considered, gold technically still faces significant risk of a further pullback. For the day, focus on the battle around the 10-day moving average at $4,560, followed by the strong resistance zone of $4,580-4,600.
Combining the 1-hour chart, yesterday's repeated testing of the $4,580 pressure suggests the hourly chart structure may be forming a head-and-shoulders bottom pattern. Today's early session pullback from $4,580 indicates the market may continue to consolidate and correct. Key technical levels for the day continue to focus on the strong resistance zone of $4,580-4,600. Before reaching that, there may be short-term pressure around $4,560. On the downside, watch the support zone of $4,520-4,500, which aligns with the lower boundary of the range and the short-term trendline.
Trading Strategy for Today: Focus on the broader range of $4,600-4,500 for consolidation, with a narrower range potentially between $4,560-4,520. Operate with short-term strategies of buying low and selling high within the mentioned ranges.
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