Market Insights > Daily Market Analysis

19 May 2025,05:56

Daily Market Analysis

Gold Rebounds Sharply as US Economic Woes Spark Safe-Haven Demand

19 May 2025, 05:56

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Key Takeaways:

*Gold regains strength after disappointing US CPI, PPI, and Retail Sales data.

*Moody’s downgrade of US credit fuels flight to safety amid rising economic concerns.
Safe-haven flows return, reversing gold’s earlier weakness from US-China trade optimism.

Market Summary:

After the temporary US-China trade truce and the 90-day delay on new tariffs, gold initially experienced a selloff, breaking below key support levels as risk sentiment improved. However, that optimism was short-lived. A string of downbeat US macroeconomic data—including weaker-than-expected CPI, PPI, and Core Retail Sales—sparked renewed concerns about slowing inflation and softening consumer demand. These signals reinforced fears that the trade war had already damaged US economic fundamentals, prompting investors to seek safety in gold once again.

Adding to market jitters, Moody’s downgraded the outlook on US debt, citing an unsustainable fiscal trajectory. The downgrade raised the specter of higher Treasury yields due to increased credit risk premiums, which could weigh on corporate borrowing costs and economic growth. As a result, global equities, including US futures and Asian markets (Japan, Australia, South Korea), slipped, reinforcing safe-haven flows into gold.

Technical Analysis:

GOLD, H4

Gold prices are trending higher and currently testing a key resistance level. The MACD shows increasing bullish momentum, while the RSI at 51 suggests a slightly bullish bias as it remains above the midline. If momentum continues and gold breaks above the immediate resistance at 3240.00, further gains toward the next resistance at 3355.00 are likely. However, failure to breach the resistance could trigger a short-term retracement, with consolidation potentially taking place near the support level of 3120.00.

Resistance Levels: 3240.00, 3355.00
Support Levels: 3120.00, 3045.00

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