On May 29th, our analysis from Thursday suggested that while oil prices continued to decline during U.S.-Iran negotiations, gold remained under pressure. This was primarily due to the Federal Reserve maintaining high interest rates and the increasing expectations for further rate hikes, which weighed on gold prices. Additionally, short-term technical indicators pointed to a potential rebound in gold; however, the bears still held the overall advantage. Therefore, we advised in our strategy to focus on the support level around $4400. A break below this level would shift attention to $4300, while resistance was expected near $4500 and $4530.

Looking at the subsequent price action, gold rebounded to $4462 after opening in the Asian session on Thursday but encountered resistance. It then experienced a sharp, brief decline during the session, falling below the key $4400 level to establish a new two-month low of $4366 before stabilizing. For most of the day, gold traded under pressure below $4400. However, following the U.S. market open, it broke above $4400 and surged rapidly, reaching a session high of $4516 and fully recovering the day's losses. It is currently trading around $4493. Overall, gold remained under pressure during the Asian and European sessions on Thursday, aligning with our expectations. While the U.S. session saw a counterattack, it did not alter the current bearish bias in the market.

According to a Wolfinance star analyst, gold's decline this week, hitting a new two-month low, was mainly driven by easing tensions in the Middle East, which shifted market focus back to expectations for the Federal Reserve's monetary policy. Specifically, negotiations between the U.S. and Iran have cooled regional tensions, leading to a drop in oil prices to a one-month low. However, the U.S. dollar did not follow suit in declining. This is because the earlier U.S.-Iran conflict had caused a significant spike in oil prices, leading to soaring energy costs that pushed U.S. CPI data to a three-year high. This development quashed market expectations for a Fed rate cut and instead fueled expectations for a rate hike this year, directly pressuring gold prices. The rebound in gold during the U.S. session on Thursday was primarily triggered by the release of U.S. PCE data, which fell short of both expectations and previous values. This suggests that inflation may not be as severe as anticipated. Additionally, a downward revision to U.S. GDP data indicated slower economic growth than the market expected, reducing the perceived necessity for the Fed to maintain high interest rates for an extended period. However, market expectations for a Fed rate hike this year have not changed significantly, with the probability remaining close to 50%, which limits the scope for gold's rebound.

On the daily chart, Thursday's rebound from the lows has alleviated some short-term downward pressure, but the overall trend remains bearish and under pressure. Support levels to watch are $4440 and $4400, the latter also aligning with the lower Bollinger Band on the daily chart. Resistance is observed around the $4500 level, which is the current intraday rebound high, extending to Thursday's peak of $4516, which coincides with the 10-day moving average. A sustained break above this zone would shift focus to the $4580 area, a level that gold tested and faced resistance at earlier in the week and which is near the middle Bollinger Band on the daily chart. The bearish crossover of the 5-day moving average and the MACD indicator has slowed significantly. The RSI shows a slight bearish crossover, while the KDJ indicator forms a bullish crossover. Short-term technical indicators suggest a rebound is possible, but the bears still maintain the overall advantage.

Intraday Gold Reference: The weaker-than-expected U.S. PCE data hints that inflation may not be as fierce as previously feared, reducing the perceived necessity for the Federal Reserve to maintain high interest rates for a prolonged period, thereby supporting a rebound in gold. However, market expectations for a Fed rate hike this year remain near 50%, which caps the potential for a gold price rally. The recommended trading approach is to treat the market with a range-bound mindset. Key support levels to watch are $4440 and $4400. For resistance, monitor whether prices can break and hold above the $4500 to $4516 zone. A sustained break above this area would shift focus to $4580.