Spot gold accelerated its decline, dropping over 2% during the day
On May 16, the price of spot gold accelerated its decline, with short-term losses expanding to nearly $30, falling below $3170/oz, with a daily decline of 2.18%.
Reasons for the Decline
The main reasons for the decline in gold prices include:
1. Easing of market risk aversion: The easing of Sino-U.S. trade relations has reduced market risk aversion, leading to decreased demand for gold from investors.
2. Strengthening of the dollar: The strengthening of the dollar index has also put pressure on gold prices. The strong dollar makes gold priced in dollars more expensive for non-dollar holders, thereby suppressing demand.
3. Profit-taking: Previously, gold prices had surged, and some investors chose to take profits, resulting in increased selling pressure in the market.
Technical Analysis
From a technical perspective, gold prices have broken below the important support level of $3265-3260/oz, triggering new selling. The next key support level may be at $3229-3228/oz, which is the 50% Fibonacci retracement level of gold's rebound from the mid-$3000s.
Outlook
Although gold prices have experienced a significant decline in the short term, analysts believe that in the long term, gold's safe-haven properties and its function as a hedge against inflation still exist. With the ongoing uncertainty in the global economy, gold prices are expected to recover in the coming months.
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