Weekly Technical and Fundamental Analysis of Gold – May 12
If you switch your timeframe to weekly, you will notice that the global gold ounce, after two weeks of decline, ended the week ending May 10 in a green color and in an upward trend.
n fact, global gold gained over 2.5% last week and closed at a price level of $2360.
It is worth noting that global gold was fluctuating between $2300 and $2330 levels until Thursday of last week. Eventually, the gold ounce started to rise and show strength on Friday after the weak weekly jobless claims report, surpassing expectations.
Next week, all eyes will be on the important inflation reports CPI and PPI in the US; the results of these two reports, especially the CPI news, will clarify the path of US central bank policies.
Events of last week in the gold market:
Global gold opened at $2301 on Monday, May 6, dropped to $2291, rose to $2332, and finally closed at $2323 on the working day.
In fact, it can be said that the global gold ounce had a very calm and non-fluctuating situation last week and on Monday.
Then global gold started to decline on Tuesday and Wednesday until reaching the important level of $2300.
Remember that as we mentioned before, the mentioned level of $2300 has been acting as an important support level for some time.
Last week, the Reserve Bank of Australia (RBA) held its important monthly meeting to determine the latest interest rate situation. As predicted by economic analysts and financial market experts, the RBA left its interest rates unchanged at 4.35%.
The most important point of this meeting was that despite traders’ concerns about the statements of RBA officials, the bank’s board did not present any statements or opinions that would change the future policies of RBA. In fact, RBA officials had taken a hawkish stance in their previous meeting which was not repeated in this meeting.
However, Michelle Bullock, the current head of RBA, reiterated that if inflation, especially in the services sector, remains high, policymakers are ready to act.
In addition to the RBA, the Bank of England (BoE) authorities also held their important monthly meeting last week. As predicted by economic analysts and financial market experts, the BoE left its interest rates unchanged at 5.25% without any changes.
Alongside reading their own bank statement, the Bank of England also published the future monetary policy outlook of the bank.
The interesting point was that BoE officials outlined a better economic growth and lower inflation outlook for the future.
This means that BoE officials are expecting better economic growth with lower inflation in the future.
According to the latest reports, it is expected that the UK’s Gross Domestic Product (GDP) for the second quarter will be 0.2%, increasing to 0.9% in a year, then to 1.2% in 2026, and to 1.6% in 2027.
Additionally, the new forecasts of the Bank of England indicate that annual inflation rates are expected to decrease to 1.9% over the next two years and to 1.6% over the next three years, which is below BoE’s 2% target.
A very important point that the current head of the Bank of England, Andrew Bailey, mentioned was that the market should expect a very sharp decrease in interest rates.
Following this statement, the British pound started to decline against the US dollar, disappointing its supporters.
Then came Thursday; the day when the market was waiting for an important report on US initial jobless claims (this report is one of the relevant news for the US job market and plays a significant role in shaping US central bank policies).
According to the latest reports released by the US Labor Department, it was revealed that the number of individuals filing for unemployment claims increased by 231,000 in the week ending May 3!
This was the highest figure since November 2023 and caused the US dollar to start declining against its competitors (in general, remember that the lower this report figure is, the stronger the dollar becomes, and conversely, the higher this number is, the weaker the dollar becomes).
Events of next week in forex and gold markets:
If there is only one important report to be released next week that can move the dollar and gold, it is the US Consumer Price Index (CPI) news.
CPI, short for Consumer Price Index, is one of the most important economic indicators. Analysts refer to it as the Consumer Inflation Index or CPI.
CPI is a monthly report on the amount of money paid by consumers for goods and services such as food, clothing, medical services, transportation, etc. Therefore, the CPI index is a measure of people’s purchasing power and, in other words, a measure of inflation.
The CPI report is released in the US and many other countries with advanced economic structures, but due to the US’s influence on the global economy, analysts follow US CPI news more closely.
Economic analysts and financial market experts expect that US monthly inflation in April will decrease from 0.4% to 0.3% compared to the previous month.
Additionally, it is predicted that annual CPI will decrease from 3.5% to 3.4%.
In general, remember that if for any reason US monthly inflation exceeds market expectations, the US dollar will strengthen, and global gold prices will decline.
Conversely, if monthly consumer inflation decreases compared to forecasts, the US dollar will weaken, and global gold prices will rise.
Also, the Producer Price Index (PPI) report is scheduled to be released a day before the CPI news on Wednesday.
Analysts expect that monthly producer inflation remains steady at 0.2%, with only the monthly PPI itself expected to increase from 0.2% to 0.3%.
Keep in mind that between these two reports, the CPI news will have a significant impact on the US dollar and gold prices, especially in these days when it is expected that the Federal Reserve will lower its rates in the coming months.
At the end, remember that the US is scheduled to release its retail sales report, and the Chinese are set to release their retail sales, industrial production, and housing price index news next Friday.
Weekly technical analysis of gold:
The floor and ceiling prices of gold in the past week were 2291 and 2378. If you open the daily gold chart now and plot an RSI indicator, you will see that the indicator’s peak is currently pointing upwards and showing a value of 60.
This means that control is still in the hands of market bulls, and the daily trend of gold is still upward. Additionally, if you draw an upward channel on the daily timeframe, you will notice that global gold is trading just outside its upward channel and slightly above it.
Key support levels in the analysis of global gold ounce:
If gold were to decline, the first significant support level would be the important area of $2350. If gold penetrates below this area, the next important price level is $2340. If market bears push gold lower, the next important levels are $2330 and $2320.
Key resistance levels in the analysis of global gold ounce:
If gold were to increase, the first important resistance level would be $2370. If gold successfully surpasses this area, the next important level is $2380. If market bulls manage to push the price of gold higher, the next resistance levels would be $2390 and $2400.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.
Happy trading
may the pips be ever in your favor!
