Gold market analysis

The tariff war between China and the US has seen a turn for the better, weakening the safe-haven function of gold. The gold price once plunged to a low not seen in over a month. Although there was some support from bargain hunters at lower levels, the technical outlook still seemed unsatisfactory. The unidirectional upward trend has changed, and the market may experience volatility in the future. 

At the beginning of the week, gold opened lower with a gap. The talks between China and the US in Switzerland showed a good atmosphere and consensus was reached on major issues. Unlike in April, there was no confrontation. Gold opened at 3286 on Monday and rebounded briefly but failed to stabilize above 3300. 

Gold prices have been hovering around the lowest point of the month, mostly fluctuating below 3,260. Due to the break below the monthly low, selling pressure once expanded the range. The inflation data released by the United States indicated that inflationary pressure was only moderate, which itself provided room for the Federal Reserve to cut interest rates. However, as the pressure from the trade war has eased, the market has reduced its expectation from a one-percentage-point cut by the end of the year to a half-percentage-point cut. Therefore, gold prices were only supported by bargain hunting during the week and failed to turn the decline into an increase. 

On the other hand, the decline in geopolitical risks has also reduced the demand for gold. US President Trump's visit to the Middle East, the prospect of a US-Iran agreement easing the disputes in the region, and the resumption of peace talks between Russia and Ukraine have all weakened the safe-haven function of gold. The gold price has repeatedly fallen below the 3,200 mark and narrowly held onto 3,203 at the close of the weekend. 

Looking ahead to this week, there are not many economic data releases in the US. However, the US-Iran agreement and the Russia-Ukraine peace talks are expected to cause market volatility. Technically, gold formed a double top at 3430 and broke through the neckline last week. The rescue rally failed to return above the neckline, indicating an unfavorable trend. The measured range...