Gold market analysis

"Gold Price Short-Term Trend Expected to Fall First Then Rise" 2/7 10:00 am Completed 

Gold prices staged a so-called retaliatory rebound on the first trading day of the second half of the year. Spot gold prices approached $3,358 per ounce in the early New York market yesterday, rising above the 50-day SMA (3,320.8) and even breaking through the 20-day SMA (3,351.4). It is a common practice in financial markets to "match events or economic data to price movements", that is, to try to explain the reasons behind price rises and falls. This is not surprising, as financial markets are filled with known and unknown information for investors, and investors dislike uncertainty the most. If they know the reasons behind price movements, they may feel more at ease. I, on the other hand, would observe the reasoning held by the market to further grasp the direction of price movements. 

Tariff measures have hindered interest rate cuts. 

Based on the current evidence, the possibility still exists that the Federal Reserve may cut interest rates as early as July. When asked yesterday at the European Central Bank forum whether a rate cut in July would be too early, Fed Chair Powell said that this possibility could not be ruled out. The authorities will make a decision at each meeting rather than ruling out a rate cut in advance, and everything depends on the performance of economic data. However, he reiterated that if it were not for Trump's high tariffs, the authorities might have cut rates further. 

Although the gold price has temporarily returned above the 50-day SMA and even broke through the resistance of the downtrend channel on the daily chart yesterday, the significant rise on Monday makes a false breakout more likely yesterday. The cumulative rebound of the spot gold price since the beginning of this week has exceeded 50% of the maximum decline from June 16 to 30. If the rebound reaches 61.8%, the gold price could reach $3,373.4. $3,400 remains a key resistance level, and the short-term probability of a price pullback is relatively high. 

Gold prices may fall back after forming a double top at 3358. 

In the short term, since gold prices have re-stabilized above $3,300, this level is expected to once again serve as a key support for immediate adjustments. Gold prices are likely to fluctuate above this level in the short term. If gold prices challenge this level again within the day, be cautious of a double top and subsequent decline. From an hourly chart perspective, gold prices have reached the basic upward range of the third wave and are now in the fourth wave of adjustment. The downward target is $3,315, and a deeper adjustment could reach $3,302.7. $3,358 can be temporarily regarded as the upward target of the fifth wave. However, even if this level is broken, a double top and subsequent decline is highly possible. Therefore, it is expected that gold prices will show a pattern of first decline and then rise in the short term. 

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

MTF Special Analyst Zheng Guangfu