On Friday (April 26), gold prices maintained their gains. Spot gold was reported at $2,338.65 per ounce, up 0.3% on the same day. Earlier data showed that the increase in US prices was in line with expectations and failed to stimulate the rise of the US dollar, enabling gold to continue to stabilize in the recent low region. However, as some geopolitical risk premiums fell, the price of gold also recorded its worst weekly performance since December.
Source: Yi Huitong
The US inflation data showed no signs of slowing down last Friday. The data showed that the personal consumption expenditure (PCE) price index rose 0.3% month-on-month in March, in line with expectations. It rose 2.7% year on year, and is expected to be 2.6%. The PCE price index is one of the key inflation indicators that the Federal Reserve tracks to measure whether it has achieved its 2% target. Although Friday's results weren't as popular as rumored, the stark reality is that the short-term trend of the inflation index favored by the Federal Reserve has been steadily rising since the beginning of 2024. This triggered the market to confirm expectations that the Fed might postpone interest rate cuts until later this year, and it is expected that the Fed will show a hawkish tone at the May interest rate meeting. The Federal Reserve will announce its monetary policy decision on May 1. The market expects the Federal Reserve to keep the policy interest rate of 5.25% to 5.5% unchanged. According to the Chicago Mercantile Exchange (CME) “Federal Reserve Watch” tool, the probability that the Federal Reserve will choose to keep its policy unchanged again in June is about 90%. The Federal Reserve is unlikely to provide any new hints in its statement about the timing of the policy shift. However, at the press conference after the meeting, Federal Reserve Chairman Jerome Powell (Jerome Powell) is likely to be asked if interest rate cuts are still possible in June. If Powell doesn't close the door to cutting interest rates in June, the initial reaction could trigger a sharp drop in US Treasury yields and boost gold. And if Powell takes a worried tone about recent developments in inflation, the US dollar may remain resilient against its rivals and limit the upside of gold. Furthermore. This Friday (May 3), the US Bureau of Labor Statistics will also release the April employment report. If the increase in the number of non-farm payrolls in the US falls significantly (for example, the data falls to close to 150,000), it may trigger a sell-off in the US dollar and trigger an immediate reaction in gold prices. On the other hand, if the growth in non-farm payroll data is stronger than expected, especially when wage inflation data is hot, it may increase expectations that the Fed will not act in September and put further pressure on gold, which is already in the adjustment phase.
On a technical level, judging from the daily gold chart, the Relative Strength Index (RSI) climbed to 60 after falling to 50 earlier last week, suggesting that the recent retracement is still a technical correction and has not yet shown a trend reversal. Furthermore, after closing below the 20-day simple moving average (SMA) last Wednesday, the price of gold remained hovering near that moving average, reflecting sellers' hesitation. On the upside, $2,360 per ounce (static level) is a short-term resistance level for gold prices. If this resistance is overcome, the next resistance for gold prices is at 2,400 US dollars/ounce (static level, the end of the latest upward trend) and 2,430 US dollars/ounce (the historical high set on April 12). On the other hand, $2,300 per ounce (23.6% Fibonacci retracement level of the recent upward trend since mid-February) provided strong support. If it falls below this support, the next supports are at $2,280 per ounce (static level) and $2,240 per ounce (38.2% Fibonacci retracement level).
Bank of China Guangdong Branch Wang Gang is just a personal opinion
Does not represent the views of the organization