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Fundamentals

Spot gold oscillated lower during the Asian session on Wednesday (April 19th) and is currently trading around USD1978/oz. Meanwhile, the strong Chinese economic data on Tuesday caused a slight drop in the safe-haven USD, helping the gold to rebound slightly above 2000. However, the safe-haven buying demand for gold was also weakened, as the US housing market data stabilized, and the "Volatility Index" fell to a more than one-year low. In addition, the USD was also supported by hawkish Fed officials, including St. Louis Fed President Bullard, who said overnight that the Fed should continue to raise interest rates, with a preference for a hike to a range of 5.50-5.75%. Several other Fed officials also spoke to the hawkish, the Fed's May rate hike is expected to envelop the market, which makes the USDX resistant to decline, and gold prices are expected to depreciate soon.

In general: Fed officials are hawkish. The US data is better and the bet on the Fed raising interest rates by 25 bps in May surges to 90%, but these could not affect the rate-cut expectations by the end of the year due to a recession. Moreover, the retracement is just a reversion of the optimism about the expectation of a Fed's rate cut in the second semester. In the short term, the phase adjustment of the precious metals may continue, but the space below is also limited, the medium and long-term long allocation value of precious metals should be maintained. Furthermore, for the previously suggested short positions, traders should gradually take profit, and for those who have no positions, try to buy low and sell high between 1975 to 2005 today.

Technical Analysis

Daily chart: Oscillating downward. The engulfed bearish signal is still unbroken at 2050, and gold prices are currently suppressed by the 5-day SMA and 10-day SMA, with the continuing death cross after the MACD's bearish divergence. Besides, before gold breaks through the 20-day SMA (1992), gold will oscillate downward. At present, gold has broken through the nearly two-week low of 1981, indicating strong short-term bearish signals. Further targets are expected to be around 1955, which is the 38.2% retracement of the 1805-2048 rally. Then, the lower support on March 27th is near 1944.

Before losing 1955, bulls may recover the appreciation. The initial resistance will be near the 20-day SMA (1992) and Monday's high resistance will be near 2015. If this position is recovered, short-term bearish signals will be weakened. The following resistance is near 2020 and the strong resistance is at the high of April 5th (2032). If this resistance is broken above, further bullish signals will be added.  

Trading Recommendations

Trading direction: Long

Entry price: 1975

Target price: 2005.000

Stop loss: 1955.000

Support: 1955.000/1943.000

Resistance: 2005.000/2015.000