Gold market analysis

"Gold Price: Be Cautious in Short-Term Bets for a Short-Term Rebound" 30/6 9:18 am Completed 

Gold prices plunged to a near one-month low last Friday as investors shifted to high-risk assets amid easing geopolitical tensions in the Middle East. July gold futures dropped 1.8% to close at $3,273.7 per ounce, with a weekly decline of about 2.9%. July silver futures fell 1.5% to close at $36.04 per ounce, while spot gold settled at around $3,274 per ounce. 

The US-China trade talks have reached a framework agreement. 

The United States and China have made progress in trade negotiations. China has agreed to provide the United States with the much-needed rare earths. White House officials said that the United States and China have reached "additional understanding on the framework for implementing the Geneva agreement", and a spokesperson for China's Ministry of Commerce later said that both sides have "confirmed the details of the framework", and pointed out that the United States will lift "restrictive measures", while China will "review and approve" export control projects. 

In addition, US Commerce Secretary Wilbur Ross said that negotiations with ten other countries are ongoing, reflecting a shift from the previous rigid stance on trade policy. This news encouraged investors, triggering a rebound in the US stock market and causing gold prices to fall. In terms of data, consumer spending, which accounts for over 60% of the US GDP, slightly declined by 0.1% in May, indicating the impact of tariffs on consumer demand. Personal income also decreased by 0.4% in the same month. Moreover, the overall US PCE rose by 0.1% month-on-month in May, in line with the increase in April and market expectations. The year-on-year increase in PCE accelerated to 2.3%, higher than 2.2% in April, in line with expectations. The year-on-year increase in core PCE also accelerated to 2.7%, higher than the revised 2.6% in April. 

Gold prices have broken below the 50-day moving average, indicating a medium-term weakening trend. 

Gold prices were under pressure across the board last week, hitting a low of $3,255 on Friday before rebounding and then falling again, unable to regain the $3,300 mark. This morning in the early Asian session, it briefly touched $3,247.5 before stabilizing above $3,260. The cumulative decline has met the 100% Fibonacci extension target of $3,252 that I mentioned on the hourly chart. However, it's important to note that spot gold closed below the 50-day SMA ($3,323.8) for the first time since January 8th, and also broke through the TD demand line on the daily chart, with a measured decline target of $3,129, close to the adjustment low of $3,120 on May 15th. Therefore, this level is expected to be the next major support level for spot gold. 

As the gold price has reached the Fibonacci extension level of the decline, the short-term rebound opportunity is relatively high. However, it is expected that the 50-day SMA will act as a resistance for the rebound. Additionally, there are four technical resistances between $3300 and $3315: 1) 50% retracement of the short-term decline on the hourly chart - $3298; 2) 50-hour SMA - $3308 (continuously declining over time); 3) previous double bottom support on the hourly chart - $3312 to $3310; 4) 61.8% retracement of the short-term decline on the hourly chart - $3311. Therefore, the $3300 to $3315 range is a strong resistance zone for the gold price in the short term. Even if investors are optimistic about the short-term trend of the gold price, they should wait for it to close above $3275 on the hourly chart before considering a rebound. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu