International gold prices edged lower on Wednesday (May 29) as the U.S. dollar and U.S. bond yields stabilized before the Federal Reserve released key inflation data.
Spot gold continued the volatile momentum at the beginning of the week and is currently declining slightly, reaching a minimum of $2,334. On May 20, gold prices hit a record high of $2,449.89.
In addition, there are still doubts about the timing of the Federal Reserve’s first rate cut, while the possibility of another rate hike remains as inflation remains above target.
Investors are closely focused on Friday’s release of core U.S. personal consumption expenditures (PCE) data, the Fed’s favored inflation measure.
The market expects the core personal consumption expenditures index to be basically stable, but any signs of continued inflationary pressures will boost the dollar and thus suppress gold.
The following is a technical analysis of gold price trends:
Trend line analysis: Gold prices are currently in a key wedge formation, with the lower edge of the wedge at $2,372 per ounce. If the price of gold can close above this level on a daily basis, it will show strong buying interest.
Moving average: Short-term support for gold prices is located at the 50-day moving average of $2,323 per ounce. If gold prices fall below this level, it may further drop to the psychological level of $2,300 per ounce.
Relative Strength Index (RSI): The 14-day RSI is currently above 50, around 52.60, indicating that gold prices retain bullish potential.
Resistance and support levels: If the gold price can return to above the 21-day moving average of $2,353/ounce and continue to rise above the resistance level of $2,372/ounce, it will provide support for the continued recovery of gold prices.
The upward target is to test the May 24 high of $2,384 per ounce, and further to the important psychological level of $2,400 per ounce.
Market Sentiment: While tensions in the Middle East and a pickup in physical gold demand in India provided support for gold prices, a resurgent U.S. dollar and comments from Federal Reserve officials weighed on gold prices.
However, the market remains optimistic about China’s efforts to boost the real estate industry and the IMF has raised its GDP forecast for China, which may limit the downside of gold prices.
Author: Zhou Tong (analyst) 29-05-2024
At 21:00 Hong Kong time, spot gold was trading at US$2,340.26 per ounce.
#The above are only the author’s personal opinions and have nothing to do with the company’s position.
Warm reminder from Hongfeng Gold: The strategic suggestions are for reference only. There are risks in entering the market, so investment needs to be cautious.