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Fundamentals

Spot gold oscillated upward during the Asian session on Monday (May 15th) and is currently trading near $2018, with fears of a U.S. debt default and concerns about a global recession providing safe-haven support to gold prices. Besides, the current market focus is on the two Parties' negotiations about the debt ceiling. Although they could reach a consensus at the last minute in the past, this time, without considering Biden's visit abroad and the House and Senate recess time, there are only 4 days left for the U.S. government to negotiate before June 1st. If the meeting makes no progress, the safe-haven currency JPY and the safe-haven commodities gold will be supported.  

In general, the economic data released by the U.S. recently is mixed. The deadline (June 1st) for the U.S. national debt ceiling is approaching and there isn't any progress in the discussions between the two Parties. Additionally, credit tightens due to the banking crisis, and the core inflation stays at a high level. All results in an accumulation of macro pressure with risk-aversion supporting the USDX to rebound significantly from bottoms. Thus, gold prices are suppressed. As it is analyzed previously, gold is at a historical high, and it will not surge further unless the recession or rate cut expectations are strengthened. Now, the Fed is likely to stop raising interest rates in June, but the rate cut is still far away. For the gold price, it will appreciate in the long run, and it is also one of the best risk-hedging assets in the future. However, gold is expected to oscillate shortly due to the absence of a catalyst, and the development of the U.S. debt ceiling will answer it.

The trading range today will be $2008-$2025.

Technical Analysis

Daily chart: oscillation. The Bollinger bands are running horizontally, and the breaking of the lower band between $1969-$2048 should be considered. Last week, gold was limited at the Bollinger upper bands, and it falls back to the middle bands currently. Furthermore, the MACD forms a death cross after bearish divergence and KDJ just formed a death cross, gold tends to oscillate downward later. Moreover, the initial support will be near $2008, which is the Bollinger middle bands, and near the 5-day SMA. Meanwhile, the support near $2000 should be considered if the support is lost, gold prices may plunge further to test the support near the Bollinger band at $1969.  

Nevertheless, gold stayed above $2000 again last week. If it closed above the 10-day SMA ($2025), short-term bearish signals will be weakened. Further resistance is near $2048, and bullish signals will be added if gold breaks above the resistance.  

Trading Recommendations

Trading direction: Long

Entry price: 2000

Target price: 2048

Stop loss: 1969

Support: 2000.000/1969.000

Resistance: 2048.000/2080.000