Upward Structure Remains Intact, but Momentum Is Beginning to Wane

Summary:

The primary focus today is the upcoming release of the U.S. May Consumer Price Index, which could validate the impact of Trump's tariffs on inflation. The risk lies in whether the price increases are transitory, potentially reigniting inflation concerns and increasing bearish pressure on gold.

SELL XAUUSD

Close Time

CLOSED

3341.69

Entry Price

3250.00

3372.00

5186.49 +43.68 +0.85%

303.1

Pips

Loss

3250.00

3372.00

Exit Price

3341.69

Entry Price

3372.00

Fundamentals

The U.S. Bureau of Labor Statistics will release the highly anticipated May Consumer Price Index (CPI) report this Wednesday, Eastern Time. Market participants will be closely monitoring whether the tariffs implemented by U.S. President Trump since April 2 have begun to impact consumer prices.

Institutional forecasts suggest that the overall U.S. CPI will maintain a 0.2% month-over-month increase in May, with the year-over-year rate rising from a four-year low of 2.3% last month to 2.5%. Core CPI, excluding volatile food and energy categories, may increase from 0.2% to 0.3% month-over-month, with the year-over-year rate expected to rise from 2.8% to 2.9%, reversing the downward trend seen this year.

Analysts indicate that U.S. core inflation may rebound in May as businesses gradually pass on increased tariff costs to core goods and food prices, while prices for some services, such as airfare, will see a narrowing of gains or outright declines

The central debate in the market currently revolves around whether the price increases resulting from tariffs are transitory. The potential impact of a one-time price surge on the Federal Reserve's policy trajectory is also under scrutiny, with implications for market volatility.

Gold prices are struggling to capitalize on modest intraday gains, remaining below the previous day's highs, as investors await the release of the U.S. CPI. The forthcoming CPI data will be pivotal in shaping market expectations regarding the Federal Reserve's interest rate cut path, thereby providing fresh directional impetus for the non-yielding gold.

Upward Structure Remains Intact, but Momentum Is Beginning to Wane_1

Technical Analysis

The technical outlook for gold remains neutral. While the bullish structure is still intact, a correction appears imminent. On the upside, a sustained move above Tuesday's high of US$3,349 would reinforce the bullish outlook, potentially targeting the intermediate resistance at US$3,360-US$3,375, and subsequently challenging the US$3,400 psychological level.

Conversely, a break below the US$3,323-US$3322 support range could invite further selling pressure, with initial support expected near US$3,300. Increased selling could drive prices down to the US$3,288-US$3,278 range, shifting the market bias to bearish and potentially leading to a test of the US$3,246 level, which marks the beginning of the upward structure. Further corrective declines could extend towards US$3,200.

Overall, despite the intact bullish structure, gold's momentum is waning. The path of least resistance appears to be downward.

Trading Recommendations

Trading Direction: Buy

Entry Price: 3340

Target Price: 3250

Stop Loss: 3372

Valid Until: June 26, 2025 23:55:00

Support: 3323, 3316, 3301

Resistance: 3349, 3355, 3360

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Upward Structure Remains Intact, but Momentum Is Beginning to Wane

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure