On Monday trading gold prices continued the correction which was started on Friday, declining by 0.5% and was below $2000 per ounce one more time. At the same time, in some moments quotes went down to the level of 1980, but the "bears" did not go for overcoming it, just like in the previous week. The gold rally is temporarily on pause, but this moment is the best for getting long positions.
On Monday the data on manufacturing activity in New York put pressure on gold quotes. Some improvement in the U.S. real estate market also contributed to this. After the publication of positive economic statistics, the possibility of tightening the monetary policy by the Fed during the meeting on May 3 has increased. According to CME FedWatch, market participants are more than 80% confident in one more hike in interest rates by 25 basis points.
Positive news for the main precious metal came from Asia. Wholesale gold demand in China for the first quarter of this year reached 465 tons, the highest level since 2019. Gold imports showed the strongest start of the year since 2015. Metal supplies from the Shanghai Gold Exchange (SGE) amounted to 157 tons in March. This is 57 tons more than in March of the last year.
China-based ETFs reported their first month of net cash inflows in March 2023, which is another sign of improvement in the Chinese gold market. While the recent rise in yellow metal prices may scare off some jewelry buyers, it is attracting investor attention, especially when financial markets continue to prioritize safe-haven assets.
Gold quotes found local support in the range 1980-1990. There is an active buyback of drawdowns, which can be used to open long positions in gold. The nearest growth target is 2015.
The following trading strategy option can be suggested:
Buy gold in the range of 1990-2000. Take profit – 2015. Stop loss – 1980.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
