Gold prices stabilized on Wednesday (April 24). Spot gold closed slightly below Tuesday's closing price of $2,311.69 per ounce. The risk premium caused by the Middle East tension has eased, and investors are closely watching the US economic data to be released later this week. These data may provide clues about the Federal Reserve's monetary policy path. After a sharp decline in the previous few trading days, gold entered a narrow range and waited for data results.

Source: Yi Huitong

Gold is still in a corrective trend as the Middle East conflict is downgraded. The key question now is whether gold's recent correction is a short-term adjustment or a downward price trend, which indicates that the top of the market has emerged. Currently, market focus has returned to economic reports and the Federal Reserve. Although recent data shows that business activity in the US has cooled down, the growth rate of manufacturing and service industries has slowed, and employment indicators have even declined. This may mean that the US economy is losing momentum, and it also seems to increase the reason for the Federal Reserve to cut interest rates. However, we must not forget that previous data showed that the US inflation rate was far above the trend level and was extremely sticky, and the Federal Reserve did not win the fight against inflation. The US consumer price index (CPI) was once again higher than expected in March, and the overall price inflation rate has risen to 3.5%. The figures in all reports fall short of the 2% target expected by the Federal Reserve. There is no indication that the Federal Reserve is about to effectively control price inflation. This is likely to keep the Federal Reserve running a cycle of high interest rates. Federal Reserve Chairman Powell also recently admitted frankly that the fight against inflation has yet to achieve the expected results, and hinted that interest rates may remain at a relatively high level for a longer period of time. Federal Reserve officials have also made “hawkish” statements on this one after another. This consistent attitude of the Federal Reserve greatly suppresses expectations of interest rate cuts, causing expectations of the Fed's interest rate cut to be reduced again and postponed again. Therefore, once the inflation figures become strong at the end of the week, the pressure on gold may continue the downward adjustment trend. As to whether it will enter a long-term weakening situation, the probability is not high.

On a technical level, the price of gold is struggling above $2,300. After falling near the 20-day exponential moving average (trading at around $2,313), gold fell into a cautious trend of narrow consolidation. The $2,300 integer mark is the emotional support level. If it falls below this level, gold is likely to fall to a three-week low of around $2,265. If it falls below the three-week low of $2,265, the next target risks the March 21 high of $2,223. The 14-period Relative Strength Index (RSI) of the daily technical indicator fell below 60.00, and the MACD MACD smooth parallel moving average formed a dead end and clearly fell, indicating that the bullish momentum seems to have come to an end for the time being. Keep an eye on the impact of the March Core Personal Consumption Expenditure Price Index (PCE) data released on Friday.

Bank of China Guangdong Branch Wang Gang

This is a personal opinion only and does not represent the views of your organization