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Fundamentals

During the Asian session on Monday (April 17th), spot gold was up slightly on shocks and is currently trading around $2010/oz. At 8:30 pm on Friday, the US retail sales data for March, known as the "horror data", was released. Because of the banking crisis in March, credit card transaction data showed that retail spending figures would be very weak, and the result was significantly weaker than expected, with overall retail sales down 1% YoY, compared to an expected 0.4% decline. However, the market trend is completely unexpected with an opposite trend shown, the USD and U.S. treasury bond yields start to rebound, while gold prices depreciated under pressure as low as 1992.22 and closed at 2003.93. In addition, the USD's rebound was blocked today at the 10-day SMA, to provide gold prices rebound opportunities, which may result from the unexpected plunge of gold prices last Friday, and the short-term technical analysis suggests rebound demand. Nevertheless, the technical analysis indicated strong oversold rebound demand, so be aware of the further descending risk of gold after the oscillating consolidation.  

In general, U.S. inflation data exhibits cooling signals, and employment slowdown, once again reinforcing the market expectation that the Fed rate hikes are ending, even interest rate cuts could be possible during the second semester. Moreover, gold prices continue to stay strong and come true, but with oil prices lifting, inflation may re-emerge. The current market is too optimistic about the expectation of the Fed's interest rate cuts in the second semester, and this expectation gap will be corrected next. Also, the current long trade in precious metals has been very crowded, phase adjustment may be approaching. Therefore, going short at highs and maintaining the trading range between 1990 to 2015 today is recommended.

Technical Analysis

Daily chart: there is the bearish Engulfing Pattern at 2050, while MACD forms a death cross after bearish divergence and the green bars appear, gold prices are reaching the top now, suggesting further risks about retracements. Moreover, the 20-day SMA (1990) is essential, as further short-term bearish signals will be added if this support is lost. Further support should be near the low of April 10th (1982), the higher support of February 2nd is near 1960 and the lower support of April 3rd is near 1950. If the support is lost, further mid-term bearish signals will be accumulated.  

The initial resistance above should be near the 5-day SMA (2015) with further resistance near 2021. Meanwhile, the resistance of the high on April 5th will be near 2032. If this position is recovered, further bearish signals will be weakened.

Trading Recommendations

Trading direction: Short

Entry price: 2015.000

Target price: 1990.000

Stop loss: 2032.000

Support: 2000.000/1990.000

Resistance: 2015.000/2032.000