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Fundamentals

Spot gold oscillated upwards during the Asian session on Wednesday (May 17th) and is currently trading around $1991. There was a large amount of data released yesterday, including better-than-expected employment and trade data in the Eurozone, especially the trade surplus accelerated improvement. Besides, the overall data of the United States is optimistic, showing a certain distance beyond a recession, with the USDX rebounding after the release of the data and gold prices declining under pressure. Moreover, the debt ceiling negotiation made progress, risk sentiment improved, and several Fed officials spoke overnight, including Cleveland Fed Governor Mester hinted at continued interest rate hikes. All these impacts significantly on gold, with gold falling to $1985 and then rebounding slightly.

U.S. April retail sales rose 0.4% MoM, weaker than the expected 0.8%, but core retail sales (excluding autos and gasoline) rose 0.6% MoM, exceeding the expected 0.2%. Besides, April's industrial output rose 0.5% MoM compared to the expected 0.0%.

In general: recently, the attention of external markets has been focused on the U.S. debt ceiling issue. This issue is more likely to trigger market volatility instead of a market crash. Meanwhile, there is some progress in the negotiations, and Biden will shorten his trip to Asia-Pacific. Risk sentiment is gradually easing, and now, investors know that the debt ceiling is just a bluff and will be settled later when a short round of risk appetite boosts. Considering this as a short-term trading logic, the gold price retracement will continue, and support will be near $1969. But this shift in the market's attention has also masked other real problems, such as the banking crisis, recession, and so on. Now, the crises in Europe and the United States are showing up endlessly, which is not bad news for gold. Only after a deep retracement can the pull-up become smoother later.

The trading range today will be $1980-$2008.

Technical Analysis

Daily chart: MACD formed a death cross and began to go wide. Additionally, KDJ formed a death cross, while the 5-day SMA also broke below the 10-day and 20-day SMAs to form a death cross, strengthening the bearish signal again. At present, gold fell below the $2000 psychological level, indicating its weakness and the current focus is on whether effective support will be formed at $1969 to build a double bottoms pattern shortly. If the support fails, the support below will be near $1950, and stronger support will be near $1934. If gold breaks through the support, a weekly level retracement may emerge.

Nonetheless, gold is shocking under $2000 without going far from this level. From a longer view, the strength of $2000 will determine the further trend, while gold may become strong later, and the short-term trend of a double-bottom pattern is clear.

Trading Recommendations

Trading direction: Long

Entry price: 1980

Target price: 1950

Stop loss: 2020

Support: 1980.000/1969.000

Resistance: 2000.000/2020.000