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Fundamentals

During Thursday's (May 25th) Asian session, spot gold narrowly oscillated, and it is currently trading near $1959. After the negotiations between the two Parties, the U.S. House Speaker, Kevin McCarthy, gave the heaviest commitment as he is convinced that the debt negotiations with U.S. President Joe Biden will reach an agreement in time and can avoid a debt default. This statement largely appeased the market sentiment, with gold prices falling back in response, gaining support at the weekly low of $1954 and entering a small shock to the upside.

Today, the initial jobless claims and the U.S. first-quarter GDP data revisions will be announced. Investors should pay close attention to it, as well as further updates about the debt ceiling negotiations.

In general, the U.S. revealed mixed data currently, and the economy remains resilient, making investors cut their bets on a series of interest rate cuts this year. Moreover, the USDX continued to strengthen, refreshing more than two-month highs, while the U.S. treasury bond yields also maintain strong, suppressing the gold price more significantly. On the one hand, although debt default concerns still exist, the support provided to the gold price is valid. Because the market expected the negotiation to reach an agreement at the last minute according to historical results and the current efforts made by authorities. On the other hand, investors must beware that new consequences may be created, so stay alert to the risk of U.S. debt default. Meanwhile, even if the agreement is made at the last minute, the damage to the U.S. economy will be tremendous. If a default does occur, it may directly and quickly trap the U.S. in a recession. Although it is not likely, investors should not bet on the direction, but on tracking and response.

Today's trading range is $1950-$1985.

Technical Analysis

1H chart: Gold stably stood near the support at $1950 during the past week, forming a triangle pattern. Currently, MACD tends to form a golden cross, with the bearish momentum weakening. Nonetheless, the bullish momentum will fade if gold fails to break through the previous support at $1969, and the gold prices may plummet further after a short-term correction, leading to a declining trend.

If gold plunges further below $1950 shortly, it may fall again a test the support near $1910. More importantly, if the level of $1910 is lost, gold will enter a great range of consolidation in weekly levels, which will open further space below.

Trading Recommendations

Trading direction: Long

Entry price: 1950

Target price: 1985

Stop loss: 1920

Support: 1950.000/1910.000

Resistance: 1985.000/2000.000