As of May 14th, gold prices have been oscillating for nearly two weeks, with both bullish and bearish market sentiments being absorbed by this seemingly directionless consolidation. Essentially, this reflects a war of attrition in sentiment among major market institutions. Currently, both bullish and bearish views have their justifications, but if this prolonged narrow-range consolidation breaks, institutions are poised to capitalize.
From a weekly chart perspective, a potential short-term breakout is anticipated next week. However, even if a breakout occurs, it is unlikely to trigger a strong unilateral trend. The broader cycle remains consolidative, a viewpoint consistently emphasized: avoid chasing rallies or selling into declines even if a breakout materializes.
For the year overall, excessive optimism regarding a significant surge in gold and silver prices is unwarranted. Elevated energy prices due to the U.S.-Iran conflict, rising inflation, and significantly reduced expectations for Federal Reserve rate cuts are headwinds. Conversely, the war has severely impacted the global economy, disrupted trade, and intensified geopolitical tensions—factors that are long-term bullish for gold. Beyond the U.S. dollar, gold reserves remain a favored safe-haven asset for central banks worldwide, explaining the aggressive purchasing by various nations.
In the medium term, however, the delayed Fed rate cuts are restraining gold's upside. After last year's rally fueled by trade war dynamics, rate cut expectations, and war-related safe-haven demand, the momentum and fundamental support for gains this year are considerably weaker. Consequently, gold prices may maintain their current wide oscillations on weekly and monthly charts throughout the year, necessitating a clear understanding of this market context.
Key market focus currently centers on the high-profile visit by former U.S. President Trump to China. Will trade tariffs ease? Can Sino-U.S. economic and trade relations warm up? These are critical market concerns. Trade détente would be bearish for gold but could help alleviate U.S. inflation. Should inflation ease, expectations for Fed rate cuts could rise again, which would support gold prices. Thus, the market awaits further developments.
Currently, gold's continuous consolidation may soon see a short-term breakout, though the momentum is expected to remain limited. From a weekly standpoint, the current rebound phase is not entirely complete. Since prices touched a low near 4500 earlier, a robust rebound has essentially established a bullish recovery trend. Next week, the short-term rebound is likely to continue, potentially pushing prices higher within a consolidative pattern, though the overall upside is expected to be constrained. Initial resistance is seen around the 4780-4800 zone. If prices rally and face rejection again, a short-term pullback is anticipated, possibly reigniting a downward oscillatory trend.
For now, short-term trading should remain conservative, focusing on quick entries and exits within small price swings.
For today's short-term trading, consider long positions near the 4660 support level. On the upside, short-term resistance around 4720-4730 offers an area for short positions. Aim for profits of over ten points per trade. Initially, focus on the narrow 4660-4730 range for long and short opportunities. If this range breaks, expand the trading zone to this week's high and low points of 4630-4770 for broader range trading. Regardless of whether trading within a narrow or expanded range, avoid chasing breakouts; wait for clear price action before entering new trades.
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