On Wednesday, May 21, spot gold prices experienced a significant rise. The primary catalyst was the potential resolution of tensions involving Iran, which pressured oil prices lower. This development alleviated some inflation concerns and contributed to a retreat in U.S. Treasury yields from recent highs. Reports indicated that the text of a U.S.-Iran agreement might be nearing completion, with the U.S. President stating that negotiations had entered the "final stage." Spot gold closed sharply higher by $61.76, or 1.4%, at $4,543.53 per ounce, after earlier touching a seven-week low during the session.
The minutes from the Federal Reserve's April meeting revealed that policymakers warned that a conflict involving Iran could push inflation higher, reinforcing market expectations for potential interest rate hikes. Most officials indicated that if inflation persists above the 2% target, a tightening of monetary policy may be necessary.
From a daily chart perspective, gold closed above the MA5 moving average following yesterday's bullish session. However, the upside may still be limited, with key resistance anticipated near the convergence of the 10-day and 20-day moving averages around $4,620. Technical indicators remain within bearish territory, suggesting an overall trend of consolidation with a bearish bias.
On the 4-hour chart, the MACD is showing a bullish crossover from low levels with increasing momentum. Immediate resistance on the 4-hour chart is seen near the upper Bollinger Band around $4,590, while the MA10 moving average provides resistance near $4,629. The short-term outlook suggests the market is in a corrective phase within a broader downtrend. Overall, for tonight's session, trading gold within a wide range is recommended.
Gold Trading Strategy: Strategy: Consider short positions in the range of $4,560-$4,562, with a stop-loss set at $4,582. Targets are near $4,524 and $4,507.
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