Tuesday, May 20th: From a fundamental perspective, the US CPI for April surged by 3.8% year-on-year, hitting a three-year high, while the PPI soared 6% annually, indicating a broad-based rise in upstream inflation. This directly shattered market expectations for interest rate cuts. Interest rate futures now show the probability of a rate cut within the year is nearly zero, and expectations for another rate hike are heating up again. This has driven both the US dollar and US Treasury yields higher, significantly weighing on gold prices. The Federal Reserve maintains a firm hawkish stance, with the new Fed Chair adopting a relatively tough attitude. A group of officials have collectively stated that inflation is not yet effectively under control, and accommodative policies will not be initiated in the short term. Market funds continue to flow out of the gold market into higher-yielding financial products, further intensifying the pressure on gold.
Although gold showed a brief rebound after opening today, it failed to break above the 4590 level, subsequently entering a phase of sustained consolidation. This price action aligns with expectations, as the structural focus of the short-term trend continues to shift downward, creating conditions for a potential further corrective decline. Additionally, gold's primary rhythm remains highly negatively correlated with the US Dollar Index. Therefore, whether gold will continue its downward trend in the near term also depends on whether the Dollar Index can maintain its relative strength.
For the day, gold is expected to continue its weak consolidation. On the upside, initial short-term resistance can be watched around 4520-4550, with stronger resistance still seen in the 4580-4590 zone. On the downside, focus will first be on the battle around the lower boundary of the hourly chart interval near 4460. If this level is breached, the short-term structural focus would shift further downward, increasing the possibility of the price extending its decline. A retest of the 4400 area or even lower levels is possible later, contingent on timing and fundamental catalysts.
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