Gold is expected to edge lower this week as surging inflation in the US driven by the war has raised expectations of higher interest rates.
Gold prices once dropped by 0.8%, approaching $4,615 per ounce, a decline of approximately 2% compared to last Friday. The US wholesale inflation rate in April accelerated to the fastest pace since 2022, and the increase in the consumer price index also reached the highest level since 2023. The strengthening of the US dollar and the sharp rise in the yield of 10-year US Treasury bonds are both unfavorable factors for gold, which does not generate interest and is priced in US dollars.
The Strait of Hormuz is a vital waterway for energy circulation. Due to the deadlock in efforts to end the Iran war, the strait remains effectively closed, prolonging the energy crisis and heightening concerns over inflation. Crude oil prices are expected to rise on a weekly basis, with West Texas Intermediate crude oil approaching $102 per barrel on Friday.
Although gold has been lackluster recently, Ryan McKay, senior commodity strategist at TD Securities, noted in a report that hedge funds may add it to their portfolios in the coming days. He said, “Our pricing scenarios still point to CTA (Commodity Trading Advisors) building long positions, which is basically across the full price path simulation.”
Silver prices rose by about 11% in May, driven by a resurgence in industrial metal speculation. The gold-silver ratio has recently declined, with some traders seeing this as an indication that silver is relatively undervalued.
Meanwhile, India has further tightened its gold import rules, stepping up its efforts to defend the rupee. A few days earlier, India raised import tariffs, which dampened demand sentiment in the world’s second-largest gold market.
Technical analysis:
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Gold: After sweeping the liquidity near 4650 overnight, no clear rebound signal was given. The price then dropped to around 4600 and is currently consolidating. We hope to see the price consolidate near 4600 for a while during the day and then start to break upward in the North American session to try to catch the long signal of the rebound. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, the price retraced to the liquidity level of 29,340, but did not reach our ideal yellow zone. Today, we will continue to wait for the price to retrace below 29,200 before considering capturing the long signal of the rebound. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, we attempted to sell on the pullback after the price dropped below 99.80, but it was unsuccessful. For today, we suggest maintaining a wait-and-see attitude towards the price and wait for the conclusion of Trump’s visit to China to see if there are any changes in the news. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
20:30 US May New York Fed Manufacturing Index
21:15 US Manufacturing Capacity Utilization Rate for April
