Diplomatic negotiations between Washington and Tehran have stalled. Earlier this week, President Trump rejected an Iranian response to a U.S. peace proposal, labeling it “unacceptable” and a “piece of garbage.” Additionally, reports have circulated regarding the possibility of the White House resuming military action against Iran.
Tehran, for its part, has not indicated any further plans to appease Trump, even as Trump is set to meet face-to-face with his Chinese counterpart Xi Jinping later this week, with the two expected to discuss a range of topics, including trade and Taiwan.
But it may be the ongoing fight between the U.S. and Iran that will likely receive much of the attention. Analysts have suggested that China, as a major importer of Iranian crude, could be persuaded to act as a guarantor of a lasting peace deal, although some observers have scaled back expectations that such a breakthrough could emerge from the gathering.
prices held steady in Asian trading on Wednesday, remaining largely range-bound this week as the sentiments remained fragile after Trump said earlier this week that negotiations with Iran were on “life support” following Tehran’s rejection of a U.S.-backed proposal aimed at ending the conflict and reopening the Strait of Hormuz.
On evaluating the movements of the gold futures this week on different time chart patterns, I find that the gold futures are stuck between a narrow range between $4,737 and $4,654, signaling that a breakout above or below this range depends on the next move by U.S. President Donald Trump this weekend, after his meeting with Xi on May 14-15.
However, Data release on Tuesday showed US consumer prices rose 0.6% in April, while the annual CPI accelerated to 3.8%, the highest since mid-2023, largely driven by surging energy prices linked to the Middle East conflict. Core inflation cut this year, while bets for a hike rose modestly.
Investors have priced out expectations of any Fed rate cut this year, while bets for a hike rose modestly.
Undoubtedly, higher borrowing costs typically weigh on bullion by increasing the opportunity cost of holding the yellow metal.
I conclude that despite some strength, gold futures look ready to slide, especially on Friday, as the net speculative positions will decline before this week ends, and if the gold futures find a breakdown below the significant support at the 100 EMA ($4,654), the next support at the 200 EMA ($4,255) could be tested this week.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
