As of May 19, gold prices have gradually rebounded, regaining some of the earlier losses. The market is worried about the stability of the banking industry again, and after the Federal Reserve Chairman Powell's speech with a softer attitude, expectations for another expectations of rate hikes has been sharply reduced in the market. Stress in the banking sector could mean that don't have to be as high for the rates in order to keep inflation, Powell said. He pointed out in a monetary conference in Washington that the Fed's past moves to deal with problems at midsize banks had largely prevented the worst from happening. The problems of Silicon Valley Bank still have the potential to affect the entire economy, and he said at the seminar that financial stability tools have helped stabilize the banking industry. On the other hand, developments are also tightening credit conditions and could weigh on economic growth, employment and inflation. Therefore, Powell's dovish speech on monetary policy may not need to increase as much as we want to achieve our goal, and the gold ushered in the strength of the bulls. 

There are many events and materials that the market should pay close attention to: the May FOMC meeting minutes, consumer spending (PCE) inflation indicators and US GDP. If the data further hints that the Fed is inclined to stop raising interest rates in June, it is expected that gold will face more rooms for bulls to rise. 

At technical levels, it has fallen below the recent downtrend line and is making a rebound signal with some bottom support on the 4-hour level chart. The current strong resistance area above is around the level of USD 1990 - 2000. Gold can reverse the downward momentum generated last week only by continuing to break through this area. And below, pay attention to the support of the low of USD 1951 touched last week. If it falls below, the support area of ​​​​the 1920-1900 area will be tested below. It is worth mentioning that this area is also supported by the ratio of 0.618, and there is an opportunity to test this level first before making an upward move. Investors who want to enter the market can pay attention to the buying opportunities at this level, and look at 2050 for the upward target.

Hugo Leong

Gold Analyst of Hantec Group