Li Xinheng: Trump speaks, gold drops. Today's trend analysis and trading suggestions

On Wednesday evening, April 2nd, U.S. President Trump made remarks suggesting Iran proposed ending the war. Although Iran later denied this, driven by the dual factors of a weakening dollar and expectations of easing Middle East tensions, gold prices rose for the fourth consecutive trading day on Wednesday (April 1st). Spot gold briefly touched a high of $4,793 per ounce and ultimately closed up 1.9% at $4,756 per ounce. However, the story reversed this morning as Trump delivered a nationwide speech implying that military actions could escalate in the short term, with heavier strikes on Iran. Meanwhile, Iran launched a large number of missiles at Israel again. Spot gold plummeted by $150, while U.S. and Brent crude oil prices continued to rise. Currently, spot gold has fallen about 1.6%, trading around $4,680.

Basic news overview:

Last night, the U.S. March ADP employment data and February retail sales data were generally better than expected, briefly suppressing expectations of rate cuts, but did not change the bullish trend for gold yesterday. This week’s focus shifts to tomorrow’s March non-farm payroll report. The small non-farm data released yesterday performed reasonably well, which to some extent supports the expectation of a stronger dollar.

According to The Washington Post, two informed sources revealed that the U.S. military has submitted a plan to President Trump aimed at seizing over 460 kilograms of high-enriched uranium inside Iran. Trump stated that the U.S. will monitor the situation via satellites and claimed Iran is currently “unable” to develop nuclear weapons, reaffirming that the goal of preventing Iran from acquiring nuclear weapons has been achieved.

After Iran’s missile and drone attack on the AlTaweelah smelting plant in Abu Dhabi, the largest aluminum producer in the Middle East, Emirates Global Aluminium (EGA), has suspended operations. The attack caused a power outage, forcing the smelting facilities to shut down uncontrollably, with metals solidifying in the smelting circuit, causing significant operational damage. Trump plans to reshape steel and aluminum tariffs: a flat 25% duty on finished products, replacing the previous 50% tariff based on metal value.

From a technical perspective on the gold daily chart, gold has closed higher for four consecutive days, reaching the expected 20-day moving average resistance level. Technically, a correction or pullback is needed, as previously indicated in yesterday’s analysis. Today’s morning adjustment, driven by news, may strengthen this correction, possibly returning gold to its mid-term downtrend. Focus on resistance around the 20-day moving average near 4780, and support levels at the 5-day moving average around 4630-20, and the 10-day moving average near 4540. The expectation is that the next two days may show some weakness, but whether the downtrend resumes depends on whether prices fall below the moving averages, possibly influenced further by Friday’s non-farm payroll data.

Looking at the one-hour chart, although gold continued to rise yesterday, the pace and resistance levels were within expectations. The 4800 level acted as a natural barrier. This morning’s news triggered a correction, with a short-term decline to around 4650, which temporarily paused for a rebound and confirmed resistance. Intraday, watch for short-term resistance around 4740-50, with the main resistance still near 4780-4800. Support at 4650 is temporary; if prices retreat further below 4600, gold may re-enter a downtrend.

Today’s trading suggestions: Wait for a rebound near 4740-50 to consider shorting, and add a small position around 4780 with a stop-loss above 4800. Target a first profit zone around 4660-50 for partial profit-taking, with remaining positions watching the 4600 level. Support levels at 4650 and 4620-00 may see short-term battles, but given the current fundamental environment, bullish conditions are hard to find, and the probability of negative news is higher. Therefore, short-term long positions are not recommended for now.