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Fundamentals

During the Asian session on Wednesday (June 7), spot gold extended fluctuations in a narrow range and is currently trading around 1956. Gold prices oscillated slightly yesterday, with a range of less than $10. Currently, the market has fallen into a tangled period again, and traders are generally choosing to stick to the sidelines. The focus of the market is on whether the Fed will raise interest rates next week, how many bps, and the consumer price index (CPI) data that will be released before the Fed's interest rate decision is announced.

Markets believe that the Fed is likely to pause rate hikes in June to assess the impact of higher interest rates on the economy. While the Fed funds rate futures traders see a 65% chance that the Fed will raise rates by at least 25 bps in July.

Key data for investors to pay attention to this trading day: the US April trade balance, the US EIA crude oil inventory changes in the week ended June 2, the OECD economic outlook report, and US Treasury Secretary Janet Yellen before the House Financial Services Committee.

Overall: The World Bank released its latest semi-annual Global Economic Prospects yesterday. While raising the global economic forecast for 2023, the outlook highlights the harm and risks to developing economies caused by the Fed's rates raising and the banking crisis in Europe and the US, which indicates the world economy has not yet entered a recession as quickly as expected. Although this is emotionally negative for gold prices, it may not constitute the trading logic of gold, which can only act as a short-term disturbance. The market is still dominated by insisting on observing the late data. In the face of complex factors, the market is currently more cautious, waiting for the release of the CPI and the Fed meeting. Gold prices may keep oscillating in the near future.

The trading reference range today is 1950-1965.

Technical Analysis

Trading at the daily timeframe, the overall state of XAUUSD is relatively strong, according to the gold closing pattern and intraday operation rhythm yesterday. Starting from Monday, the market rose sharply after bottoming out on Monday at 1938, which can be clear that gold cannot make new lows in the short term after this wave came out. The daily chart closed on Monday with a white body, similar to the previous 1932 temptation. For the time being, gold may have little space to fall. While the market is slightly stronger at present, it is also necessary to pay attention to the downside space. Support below focuses on the 1950-1955 range, which is the low support of yesterday's multiple retracements. An effective break below will weaken the bullish momentum of XAUUSD in the short term.

Be aware of the resistance around 1966 above, which is also near yesterday's highs. The MACD has a trend of forming a golden cross again at present, with the price stabilized in the MA5 and MA10. Following this trend, gold will attempt to rush higher, with topside resistance following 1975 and 1985.

Traders are recommended not to go short during the day and wait patiently for the retracement to go long. It is appropriate to go long after the gold price pulls back to the support point. Aggressive traders can keep testing long in 1950-1955 with small positions. Stop loss is around 1942. The first target of breaking even sees 1965, which can partially exit the market, and the second target could look at 1975-1985.

Trading Recommendations

Trading Direction: Long

Entry Price: 1950

Target Price: 1985

Stop Loss: 1930

Support: 1940.000/1932.000

Resistance: 1965.000/1988.000