On May 28, gold experienced a significant decline. The Asian session opened with prices fluctuating around $4500. In the early European session, after breaking below $4480 and rebounding, a short position was decisively entered. The European session then saw a sharp drop, with prices reaching a low of $4401. The short position was automatically closed for profit at $4410, resulting in a net gain of approximately $60 after accounting for losses from the earlier long position. The US session saw prices stabilize and rebound significantly, ultimately closing at $4455, marking a second consecutive daily decline.
On Thursday, May 28, reports citing Iranian state television indicated that a draft framework for a US-Iran memorandum of understanding was disclosed. Its contents reportedly include the US lifting its maritime blockade on Iran and withdrawing some military forces, with Iran gradually restoring commercial traffic through the Strait of Hormuz to pre-conflict levels within a month. Expectations of eased geopolitical tensions accelerated the withdrawal of safe-haven funds, leading to the sharp drop in gold.
This round of correction in gold prices is not driven by a single factor but by the market trading on two concurrent themes. On one hand, expectations of a US-Iran de-escalation are weakening safe-haven demand. On the other hand, the war-driven energy risks and inflation concerns are reinforcing market bets on "higher rates for longer," or even a renewed discussion of rate hikes, creating new macro headwinds for gold.
Furthermore, the US PCE data will be released tonight. As the Federal Reserve's preferred inflation gauge, a higher-than-expected core PCE reading would strengthen expectations for rate hikes, pressuring gold and potentially testing the $4350 level or even breaking below the $4300 mark. If the PCE data meets or falls below expectations, it could ease tightening fears, leading to a technical rebound in gold to test the $4460-$4480 range. This represents the biggest variable today. It is advisable to maintain light positions or reduce exposure ahead of the data release.
From a technical perspective, after falling to the $4401 level overnight, gold rebounded but faced renewed resistance and pressure around $4465. Another wave of selling occurred in the early Asian session today, pushing prices back near $4400. While this level may see some contention, the current momentum suggests an increasing likelihood of a breakdown. If $4400 is breached, the next support to watch is around $4370. Any rebound from that level would likely be viewed as a technical, oversold bounce. Resistance on any rebound would then be seen around $4460-$4480. A failure to break above this zone would maintain the bearish adjustment trend.
In summary, conflicting signals from Iran and the US regarding negotiation progress mean any unexpected statement from either side could trigger sharp gold price volatility. The trading strategy is primarily to "sell on rallies." Today's PCE data is the absolute focal point. Evening session moves will depend entirely on this data. It is recommended to reduce positions before the release to guard against volatility.
Therefore, the intraday trading suggestions are: Gold: Sell between $4410-$4405, with a stop loss at $4420, targeting $4350-$4320-$4300. Hold the position if these levels are breached.
Key financial data and events to watch today, Thursday, May 28: 20:30 US Initial Jobless Claims for the week ending May 23 20:30 US Core PCE Price Index Year-over-Year for April 20:30 US Personal Spending Month-over-Month for April 20:30 US Revised Q1 Real GDP Annualized Quarter-over-Quarter 20:30 US Core PCE Price Index Month-over-Month for April 20:30 US Durable Goods Orders Month-over-Month for April 20:55 Speech by Fed's Williams 22:00 US New Home Sales Annualized for April 22:15 Speech by Fed's Moussalem