On Tuesday, June 23, the international gold price opened at $4186.22, reached a high of $4198.44, a low of $4090.50, and closed at $4122.41. The daily range was $107.94, resulting in a decline of $58.46 or 1.40%, with the daily candlestick forming a small bearish pattern. The current gold price remains within the weak downtrend that began in mid-April. It is preliminarily assessed as a second test of the low near $4023. Whether a bottom can be found requires further observation, as the risk of further declines has not been eliminated.
From a fundamental perspective, recent US economic data shows simultaneous strength in consumption and employment. As of June 20, the US weekly Redbook Commercial Retail Sales Year-over-Year rate rose to 10%, surpassing the previous reading of 9.4%. The four-week average increase in ADP private payrolls rebounded to 30,750, showing a significant improvement from the prior figure. These two data points provide support for the Federal Reserve to maintain its restrictive monetary policy, further solidifying expectations for higher-for-longer interest rates, which continues to weigh on the gold price.
Regarding the geopolitical situation in the Middle East, a significant breakthrough has been made in the US-Iran nuclear issue. Following the signing of a memorandum of understanding, Iran's Permanent Representative to the United Nations Office in Geneva, Ali Bahreini, stated on the 23rd that the Strait of Hormuz is now fully open to commercial vessels without any charges. This further alleviates the risk of energy supply disruptions. Crude oil prices continue to retreat, and inflation expectations may improve somewhat, which is neutral to slightly positive for gold in the short term.
Simultaneously, Wall Street investment banks have collectively turned more cautious on gold. Following Goldman Sachs' downward revision of its gold price target, Deutsche Bank followed suit, lowering its highest price forecast for gold by up to 22%. Bank of America believes the likelihood of gold reaching its initial 2024 target of $6000 is low, stating that the primary obstacle for gold prices in the near term is the expected shift in the Federal Reserve's monetary policy. Currently, the market anticipates over a 70% probability of a rate hike in September. This concentrated downward revision of expectations by investment banks contrasts with their uniformly high targets at the beginning of the year, and it remains to be seen whether this will again serve as a contrarian indicator.
In summary, pressured by hawkish monetary policy expectations and a strong rebound in the US dollar index, the gold price trend remains relatively weak. However, with the decline in oil prices, if inflation expectations also recede, the market's overpricing of rate hikes may undergo a short-term correction. This could, in turn, limit the potential for further downside in gold prices.
From a technical standpoint, since mid-April, the gold price has been trading below its 5-week moving average, indicating an overall weak pattern. The 5-week moving average remains a key resistance level for the current trend. On the downside, technical support exists at the previous low of $4023 and the lower Bollinger Band near the $4000 psychological level. Although the downtrend has not yet concluded, given the current environment of overhead resistance and underlying support, the short-term downside potential for gold may be relatively limited. It is highly probable that gold will continue to fluctuate and consolidate above the $4000 level.
The daily chart candlestick pattern shows the current gold price is within a wide descending channel formed by the middle and lower Bollinger Bands, with its position declining daily. The price is notably suppressed by the 5-day and 10-day moving averages, which are currently converging around $4156 and $4210, forming the main intraday resistance levels.
Overall assessment suggests that after gold failed to break above the middle Bollinger Band last week and retreated, it is currently in the process of a second downward test of the $4023 low. The short-term direction remains primarily downward. Patience is required to await signs of stabilization, with a focus on the support strength near the $4060 level and the lower Bollinger Band around the $4000 integer mark.
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