{x} | Trading.live

Fundamentals

After recalling some gains in recent trading days, gold prices remained trading near US$2,000 for Tuesday. The price of the asset was again close to an all-time high late last week, but the market did not have enough time to test it further and the price returned to range volatility. This is in line with higher yields and similar interest rate expectations as the market is still not fully recovered from the banking turmoil; Especially in the U.S., this may continue to support gold if investors still believe the trauma of the crisis will lead to tighter credit conditions.

The last day was not one of the rich economic data. The most important economic data was the New York State Manufacturing Index, which was much higher than expected in April. The New York Fed index rose to 10.8 from -24.6 last month, although it is expected to rise slightly to -17.7. (A reading above 0 indicates increased activity) The current level is the highest since last July.

Although the index has fluctuated greatly in recent years, its significantly improved reading supports the Fed's expectation of another interest rate hike in the quiet market.

At the opening of the New York session, interest rate futures market pricing showed an 87% chance that the Fed would raise interest rates by 25 basis points in May, up from 78% last Friday to 72% the week before. This reassessment of the outlook supports the demand for the USD, which benefits from higher interest rates.

The U.S. Dollar Index (USDX) rose to 101.55 on the news (up 0.9% from Friday's low). Nevertheless, the sharp rise in the USD is still being questioned. Only a further 0.9% rise in the USD can prove that the USD has successfully defended its important level, which will bring the USDX back above its previous high and form a bullish trend.

On Tuesday, China. China's GDP growth accelerated to 4.5% in the first quarter from 2.9%, higher than the market's expected growth of 4%. Retail sales rose 10.6% YoY in March, the biggest increase since June 2021. Despite the optimistic data, industrial production grew by only 3.9% YoY in March, down from the expected 4.7%. In addition, investment in fixed assets increased by 5.1% YoY in March, lower than the expected 5.8%.

Tuesday's report from China's National Bureau of Statistics listed the challenges facing China in the first quarter, including "a tough and complicated international environment" and domestic tasks of reform, development, and stability.

The USD did not benefit after the mixed economic data was released but instead faced some selling pressure. The two-day recovery seems to have stopped. Although a number of factors have limited any meaningful gains, this in turn has provided some support for the USD-denominated price of gold.

Technical Analysis

Gold regained some of its positive momenta on Tuesday, leaving a week-and-a-half low near the US$1,981 range hit the previous day. In European trading hours, gold prices kept their modest intraday gains near the psychological threshold of $2,000; Despite the lack of further bullish confidence in the rally, bulls appear to continue to aim for the mid-course of the early rally at US$2,032.

If so, this means that gold bulls are trying to make a comeback. Interestingly, the stochastic oscillator is sending a "double" message. The indicator has been hovering in the overbought zone for the past month, clearly showing signs of exhaustion. In addition, the recent resurgence in gold prices has not been confirmed by a similar stochastic indicator, which has bought a bearish divergence.

But then again, we believe that any increase in the price of gold should be limited to below the left shoulder of the "triple top" of US$2,032. A breakthrough of this level means a reversal of expectations of continued bearishness in the later period.

Overall, the recent rebound seems to have run out. Gold bears are trying to push prices below the US$2,000 or even the threshold of US$1,981 as momentum indicators show some initial bearish signs. But before that, the bulls may continue to rise, completing our predetermined "triple-top structure." (According to the chart) It is recommended to sell at the highs and buy at the lows.

Trading Recommendations

Trading direction: Long

Entry price: 2000

Target price: 2030

Stop loss: 1976

Deadline: 2022-05-02 23:55:00

Support: 1995, 1981, 1976

Resistance: 2015, 2023, 2032