On Tuesday, international gold prices opened at $4,331.19, reached a high of $4,363.54, and hit a low of $4,236.28 before closing at $4,260.61. The daily trading range was $127.26, resulting in a loss of $69.11, or a decline of 1.60%. The daily candlestick chart formed a small bearish pattern. The price has broken below the $4,250 support level and is testing the short-term technical target near $4,200. Whether the decline will halt requires further observation.
Fundamental Analysis
Regarding geopolitical tensions in the Middle East, the strategic game between the US and Iran is showing subtle differentiation. The US Vice President acknowledged "diverging interests" between the US and Israel, emphasized the US-Iran peace agreement as a "major success," and clarified that the US core objective regarding Iran is to ensure it remains without nuclear weapons. This indicates a gradual distancing of the US position from Israel's stance in the US-Iran talks, with the US showing an urgent desire to advance negotiations. Consequently, oil prices have seen a slight retreat, providing some support for gold. However, the Middle East situation has not seen a substantive breakthrough, with risks of geopolitical tensions resurfacing, and the easing process remains challenging.
On the monetary policy front, expectations for a European Central Bank (ECB) interest rate hike are firming. Due to the unresolved Middle East situation and persistent inflationary pressures from energy costs, the market anticipates the ECB will raise rates on Thursday. Morgan Stanley's assessment suggests that if the ECB hikes while the US Federal Reserve holds rates steady in June, the narrowing interest rate differential could exert marginal pressure on the US dollar and provide potential support for gold. Nevertheless, the synchronized global trend of central bank rate hikes increases the holding cost of gold, resulting in a broadly neutral, two-way impact on its price.
Looking at economic data, the resilience of the US economy continues, but there are signals of marginal cooling. The US trade deficit narrowed in April with a significant increase in exports. If this trend persists, it could contribute to second-quarter economic growth, supporting expectations for sustained high interest rates and robust consumer momentum. For the week ending June 6th, the US Redbook Commercial Retail Sales year-over-year rate rose by 9.1%. However, there are signs of cooling in the labor market; the average weekly increase in US ADP private payrolls for the week ending May 23rd was lower than the previous figure, hinting at a potential structural weakening in the job market. The US dollar index oscillated around the 100 level, dipping before recovering its losses, while gold prices, after an initial surge, retreated once more.
In summary, the current gold market is gradually becoming less sensitive to geopolitical conflict news. Within the broader context of global monetary tightening suppressing gold prices, the short-term upward momentum for gold is not evident. The market is patiently awaiting directional guidance from the upcoming US May CPI data and the policy expectations from the Federal Reserve's June meeting.
Technical Analysis
From a technical perspective, following last week's decline, the gold price has once again moved away from the 5-week moving average and is approaching the lower Bollinger Band near $4,250, suggesting a potential for an oversold rebound. However, after breaking below the $4,250 support, the overall downtrend may not end in the short term.
The short-term daily candlestick chart shows that since retreating from the May high of $4,773, gold has been trading between the 10-day moving average and the lower Bollinger Band, exhibiting a weak downward trend. Recently, it has faced resistance from the 5-day moving average, indicating that gold is in a process of accelerated decline. Yesterday's breach below the lower Bollinger Band did not show clear signs of the fall stopping, necessitating continued caution against sustained low-level trading.
In terms of the price range, after losing the $4,385 level last week, gold has entered a trading range between $4,385 and $4,220. The $4,385-$4,400 zone, which was previously an important support, has now become a primary resistance area. As the price continues to decline, the 5-day moving average has shifted down to $4,331, becoming the first intraday resistance. Key support below is located in the $4,235-$4,190 range.
Overall Assessment
The current gold price remains in an overall weak downward trend. Technically, there is a possibility of an oversold rebound. However, the formation of a bottom typically requires multiple tests and fluctuations before it can be confirmed. Patience is required while waiting for clear bottoming signals to emerge. For the short term, the core range to watch is $4,300-$4,235. A downward break below this range could lead to a test of $4,190. Conversely, if the price breaks upward, attention should turn to the 5-day moving average area around $4,335-$4,350.
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