The price of gold fell sharply last Friday, but is now back to test major support at $2,290.
The ounce of gold under pressure after China stops its purchases
Gold prices are holding key support at $2,290 after falling on Friday last week as China stopped buying gold for its reserves in May, ending a trading frenzy. purchase which had lasted for 18 months.
The People’s Bank of China (PBOC) has increased its gold reserves every month since October 2022, but the pace slowed sharply in April, when the BPC purchased only 60,000 ounces, compared to 160,000 in March and 390,000 in February.
Gold Price Daily Chart – Key Levels
Technical analysis of the gold price
Gold price returns to test key support at $2,290
Support at $2,290 will be key to the gold price outlook. Given the underlying upward trend, the return/risk pair is technically in favor of purchases on this threshold, while a fall below would correspond to an exit from the bottom of a range, which would open the way to a correction gold.
Long-term, the outlook is technically bullish as long as the gold price remains above former multi-year resistance at around $2,075. Breaking this multi-year resistance in March theoretically opens the way for gold to rise to $2,500. Therefore, even if it breaks below short-term support at $2,290, we could see one last surge up to $2,500 over the next few months before a major consolidation.
In addition to the evolution of the appetite of central banks for the yellow metal, the price of the latter will also be greatly influenced by the evolution of geopolitical tensions. An increase in tensions would increase the chances of a rise in gold.
| Entrance | Purchase above $2290 |
| Objective | 2400$ |
| Stop | $2270 |
| Risk/Return Ratio | >5 |
