On Wednesday (May 22), the price of gold continued to fall. Spot gold fell 1.8% to $2,377.43 an ounce on the same day, and the price of gold retraced sharply by more than $40.
The minutes of the Federal Reserve's April 30 to May 1 meeting released on Wednesday show that officials believe it will take longer than previously anticipated to have greater confidence that inflation will fall back to 2%. Although recent economic data shows a downward trend in inflation, most Fed policymakers say they should wait a few more months to ensure that inflation is actually on track to return to the 2% target before cutting interest rates. Until then, we need to be patient with current high interest rates. The minutes also showed, “Many participants mentioned that if the risk of the inflation outlook becomes a reality, they are willing to further tighten policies and take appropriate action.” As can be seen from the minutes of this meeting, the current cautious remarks made by Federal Reserve officials have lowered hopes of cutting interest rates, causing the market to worry that higher interest rates for a longer period of time will drag down demand. For this reason, the market has greatly reduced the probability that the Federal Reserve will cut interest rates in summer. Some agencies have given analytical opinions that it is impossible to cut interest rates until the fall or even within the year. As a result, gold's gains have cooled down, and investors have made profits. It is expected that the minutes of the meeting will exert pressure on gold bulls for a period of time.
Source: Yi Huitong
On a technical level, Wednesday's pullback could pave the way for gold to test lower prices. As the Relative Strength Index (RSI) is targeting the downside, the momentum is turning negative. There are signs that the bulls are weakening as sellers step in. On the daily chart, the first support level for gold prices will be a low of 2,332 US dollars/ounce on May 13, followed by a low of 2,303 US dollars/ounce on May 8. Once it falls below these levels, the 50-day simple moving average (SMA) of $2,284/oz will be the next bearish target. On the other hand, if buyers push the price of gold back above 2,400 US dollars/ounce, there is a possibility that the price of gold will once again test the high of 2,450 US dollars/ounce so far during the year.
Bank of China Guangdong Branch Wang Gang
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