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Fundamentals

During Thursday's (April 13th) Asian session, gold shocked higher, and it is currently trading near $2026/oz. Overnight, the U.S. CPI data failed to meet market expectations. The market widely expected the Fed will suspend interest rate hikes after raising it in May, while the Fed's March meeting minutes show that the consequences of the U.S. banking crisis could send the U.S. economy into recession later this year. Meanwhile. the USDX fell back quickly, approaching more than two-month lows, which provided support to gold prices.

Tonight's focus is on the change in US initial jobless claims and US March PPI data. The market expects initial jobless claims to increase slightly to 232,000 and PPI growth to fall to 3% YoY.

Generally: gold prices' long-term strengthening remains unchanged, but the main line of short-term strengthening logic is also coming true, including U.S. inflation downward and the setting of interest rate hike dot plots. It means that gold has been fully priced in by the market, and there is no new support to keep the gold strong in the near term. In the long run, gold relies on the realization of the recession and the expectation of the US lowering the interest rates. However, these are still too far away for gold to surge above the previous high soon.  

Instead, the focus should be that the pre-banking crisis risk-aversion sentiment boosted the gold, but it is fading out from investors' attention, and the mainstream institutions faded the logic. It raises the short-term concerns of the gold bulls, as the current gold price reaches historical highs by the support from every perspective, just like a spring that is pulled to the maximum. If there is no continuous strength, the contraction will be astounding once the strength is released.

At the same time, risk sentiment is also on the more positive side. On the one hand, countries starting from France are getting out of the U.S. hegemony, which may turn the Russia-Ukraine war in a better direction. On the other hand, China's March export data appeared unexpected surprises. It is a surprise to the market since exports should be weak, but the data is spectacular based on a monthly calculation. The growth rate of CNH-denominated exports in a single month was 23.4%, and the growth rate of USD-denominated exports in a single month was also 14.8%, which is an indication that foreign demand may be picking up. Therefore, it is better to know that gold may surge higher and decline soon.

Technical Analysis

Regarding the daily chart, gold oscillated higher. Besides, the SMAs point at the bullish side, keeping an opportunity for gold to jump higher later. As gold reached the resistance of the annual high (2032) last week, it may appreciate further to 2050 and even to the resistance of the historical high (2075).

Nonetheless, MACD stuck with a trend to form a death cross after bearish divergence, which also indicated a deteriorating ascending momentum and the possibility of gold building a top under oscillations. Furthermore, gold may choose the direction after oscillating at highs. The initial support should be near the 5-day SMA (2009) and then will be 2000, where the 10-day SMA support locates. Additionally, the 20-day SMA is near 1984, and further bearish signals will be added if this position is lost.  

Trading Recommendations

Trading direction: Short

Entry price: 2032.000

Target price: 1984.000

Stop loss: 2075.000

Support: 2009.000/1984.000

Resistance: 2032.000/2050.000