Since mid-April we are going through some very interesting times within the financial markets, as the recent strengthening of the USD is most evident with its influence all over the world indicating the US economy is strengthening.

Backing this statement are the Treasury prices which regained strength somewhat on Wednesday after a well-received auction of 10-year Treasury’s.

Market participants have shown that there is still demand for 10-year Treasury’s with decent support for this auction, as the very notable advancement of the safe heaven is becoming even more attractive for investors.

Furthermore, today the market anticipates the U.S. CPI data which will also be a source of information for the outlook on the Federal Reserve’s interest rate hike path.

Weaker-than-expected data earlier this month did little to reduce expectations of a June interest rate hike.

Higher U.S. rates are likely to lift the dollar and push bond yields up, adding pressure on greenback-denominated, non-yielding gold.

Gold prices have been significantly decreased by the pre mentioned points however, it is our opinion that the USD’s positive run could soon end and traders would focus on other financial opportunities prevailing.

Many counteracting pending issues are not working in gold favor and that’s why it’s trading so far in May is within a very tight range.

The pending matter of trade wars between the US and China is slowly re-surfacing.

From the US side their objective is to amend the trade gap in order to satisfy their own interest.

An opinion expressed on Eikon Reuter’s was that the effect could be the increase of the cost on domestically manufactured products within the US.

These products may not be available for consumers right away and their demand could have an inflationary effect.

If inflation is not moving along with wage growth, investments in Gold could be the smartest Investment decision to make as its reaction and subsequent volatility is most probable.

Iran’s gold demand will possibly be evident for the next few months and then gradually decline as the new U.S. Sanctions start kicking in and take effect.

Looking back when sanctions were imposed on Iran in 2012, it took two years for the country’s gold demand to start falling, according to data from the World Gold Council and history has the tendency of repeating itself in some cases.

People may have the need to convert all valuable belonging to Gold in order to maintain its worth due to the ongoing weakening currency of Iran.

Conclusion

The shiny metal, which has been trading with a somewhat lethargic sideways movement during May, is considered by many analysts and traders as trading at its bottom.

This current pricing could be a low that attracts more buyers for the bullion.

Some consider it a brilliant investment for the next months as it is already trading considerably low compared to 2018 price action.

Taking in mind the upcoming US interest rate hikes in June, could be a good chance for the bullion traders targeting a positive cash flow.

Technical Analysis on Gold Market

Gold sideways movement between the $1317.65 (R1) resistance level and the $1,304.26 (S2) support level is most evident on the 4 hour chart.

Very strong support is observed at $1,304 (S2) support level as it has been tested many times in 2018 but has not been breached.

Gold bulls could be waiting to be set free as the Shiny metal has not been much of an interest lately.

If traders decide to purchase the bullion we may see it moving higher towards the $1,317.65 (R1) resistance level in order to breach it and trade around the $1,322.34 (R2) resistance hurdle.

On the other hand, if the shiny metal is utilized for selling interest we could see it moving towards the $1,308.95 (S1) support level and breach it, aiming for the $1,304.72 (S2) support hurdle.

Both purchasing and selling scenarios could be affected by today’s US CPI &Core CPI rates.