Gold has rebounded since April and has continued to the present. The whole world can see that it is because the weakening of the U.S. dollar has driven gold to do well. In addition, there is another important reason for the rise of gold, which is inflation.

The current weakening of the U.S. dollar is mainly due to the repeated discouragement given by key officials of the Federal Reserve, seeing that the speed of vaccination in various countries is accelerating, coupled with the government's relaxation of measures and bail-out cash checks, which have increased consumer demand and accelerated economic recovery. Inflation rose sharply in April, and the US CPI announced an annual increase of 4.2% in April, amazingly, it is recorded high in more than 12 years. In the situation where CPI, GDP and other economic data are very strong, the market has long-expected interest rate hikes or delisting ideas, but the Fed’s attitude has always maintained a dove voice, saying that they will not talk about interest rate hikes, that disappointing many investors who are long US dollars. Because of the Fed's move, the U.S. dollar has fallen, and inflation has risen, adding to the weakening of the U.S. dollar.

The key is that if the U.S. dollar continues to weaken, then gold will run. However, I personally think that although the United States is not talking about delisting at the moment, Fed cannot delist indefinitely if the US economic data continues to be good. Not withdrawing now does not mean that it will not withdraw in the future. Up to now, the actual inflation increase in the United States has been realized gradually. With the rising inflation pressure, the Fed’s expectation of QE reduction from the fourth quarter of this year to the beginning of next year still exists. At that time, I believe that the US dollar will naturally rebound, so I personally believe that the expectation of tightening monetary policy will limit the rebound of gold.

Technically, the current trend is bright. The US$1,870 target mentioned last month has been reached, and it has broken through the downward trend line since August last year. If it continues to rise, it needs to break the upper resistance of US$1,900 and the next level of US$1,930-1,960. However, the catch is that a Doji appeared on May 19, and the next two are small white candlesticks with upper shadows, indicating that the market may be hesitant, and the market outlook still needs attention. If it falls back below the trend line, it will be regarded as a false breakthrough, beware of a rapid fall back to the $1,800-$1,815 level.

Hugo Leong Gold Analyst of Hantec Group