Affected by the Fed's anticipated early interest rate hike in June, gold experienced a retrace. Most of the Fed participants in the FOMC conference expect to interest rates raises at least twice in 2023. As mentioned in the article of last month, when the data is bright, the Federal Reserve will not continue the quantitative easing indefinitely. Therefore, already preparing hawkish result may appear before the meeting.

This wave of gold's decline is technically traceable. We can analyze from the large cycle to the small cycle. In the weekly chart in Figure 1, the upper blue line of $1,900 is the top-level resistance of the weekly level, so as mentioned previously, if gold continues to rise, it has to break through US$1,900. Unfortunately, it didn’t succeed at last.

On the daily chart in Figure 2, several candlesticks interspersed up and down near $1,900 can be seen, indicating that the market is hesitating, and the breakthrough is not decisive enough, until June 2 happen with open high close low at the physical negative line, citing the false breakthrough mentioned earlier, showing that investors' confidence in gold bulls has gradually diminished and the green upward trend line since April has also been broken. I think that the trend line break below implies that we can no longer pay too much attention to the bulls anymore. Therefore, the probability of being bearish on the pattern will be higher. 

In addition, once the trend line is broken, even if it does not plunge downward, at least the original rising rhythm will be changed. The daily chart in Figure 2 is clearer, and the bulls seem to have come to an end. Plus, after the break, it closes at the physical negative line almost every day, and there are signs of accelerating downward. Up till June 22, it reached where it breaks through the starting point of the W bottom earlier, and it is expected to rebound at the red line area of $1,758. Estimated that it will rebound to the golden ratio of 0.5 to 0.618, which means will be pressurized when reaches 1,836-1,854 US dollars.

Hugo Leong Gold Analyst of Hantec Group