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Fundamentals

During the Asian session on Friday (May 26), spot gold is trading to the upside, which is currently trading around 1954. Overnight U.S. economic data was better than market expectations. US Treasury yields soared to near two-and-a-half-month highs as market expectations for the Fed's June rate hike heated up further. Gold prices have pulled back sharply to a new 2-month low, which is supported and rebounded from the low at the end of March, standing above the important support of 1950. Analyzing the reasons, on the one hand, the delay in reaching an agreement in the debt ceiling negotiations has led to a recovery in market worries, providing gold prices with an opportunity to rebound; On the other hand, bears are not fond of war, as traders do not want to attract bulls to encircle, so they prefer taking profits and then retreating, which also support gold prices. Besides, the Fed's June interest rate decision is also approaching, while the main voice of the market is to stop raising interest rates, which is the last bottom line of gold prices.

A series of economic data for April will be released in the United States this trading day, including durable goods orders month-on-month, PCE price index YoY, personal expenditure MoM, etc. Since these data are more important, traders can pay attention to them and prepare for position response.

Overall: US real GDP growth in the first quarter was revised upward to 1.3%, up 0.2% from the initial value. The core PCE price index in the first quarter was revised up to 5% annualized from the previous quarter, up 0.1% from the initial value. U.S. jobless claims rose by 229,000 in the week ended May 20, below expectations of 245,000. The headline data again points to the continued strength of the US labor market, and the new round of economic data also remains strong and resilient. This has led to concerns that the Fed may continue to raise interest rates to curb inflation, with the probability of a June rate hike now hitting 50%, which also weighs on precious metals. Gold prices are expected to remain under pressure to pull back in the short term. However, Europe and the United States have fallen into a strange circle, that is, the "three highs" of high inflation, high-interest rates, and high money supply, leaving finance always in a very unstable state. Traders can grab this chance to cover previous high-selling positions gradually and can consider adding to higher positions around the end of June.  

The trading reference range today is 1935-1970.

Technical Analysis

Trading at the daily timeframe, MACD has formed a death cross and crossed the zero level downward, with the short-term moving average diverging downward as well. Gold prices remain suppressed by the MA5 of 1959 and are biased to the downside. Key support is around the MA100 at 1935, as is support from the nearly two-month low touched on March 22. The loss of this support will increase the bearish signal in the future. Further support looks at 61.8% of the 1804-2079 rally, with retracement support around 1910 and then support near the 1900 integer mark.

Trading Recommendations

Trading Direction: Long

Entry Price:1935

Target Price: 1985

Stop Loss: 1900

Support: 1935.000/1910.000

Resistance: 1969.000/1985.000