Gold prices saw a V-shaped reversal after the release of ISM data and a turning point in Iran negotiations.
2026-05-02 01:47:17
Gold prices saw a dramatic move on Friday (May 1st). The Asian and European sessions continued the week's decline, with spot gold briefly dipping to an intraday low of $4,559, a drop of over 1%, indicating very weak bullish sentiment. The reversal occurred after the North American session opened, with two catalysts acting almost simultaneously.
Firstly, there's the data. The ISM Manufacturing PMI remained at 52.7% in April, lower than the market expectation of 53.1%, while the price sub-index surged from 78.3 to 84.6. This combination of "lower-than-expected growth and higher-than-expected inflation" directly ignited the stagflation trading logic, and short sellers began to cover their positions.
Secondly, there's the geopolitical aspect. Iran's state news agency reported that Tehran submitted a new proposal for negotiations with the United States to Pakistani mediators on Thursday. This news significantly improved market risk appetite, putting downward pressure on the US dollar index, which fell by approximately 0.3%.
Kitco Metals senior analyst Jim Wyckoff commented, "Iran's signals of a willingness to resume dialogue could mark a breakthrough in the peace process, boosting investor risk appetite, putting pressure on the dollar index, and pushing up gold prices."
With two positive factors combined, spot gold rose from an intraday low of $4,559 to around $4,636, while June gold futures rose 0.4% to $4,649. Despite this, gold still recorded a weekly decline of approximately 1.6%.
Technical aspects: Key resistance is imminent, a breakout still needs confirmation.
(Spot gold daily chart source: FX678)
This rebound is corrective in nature and has not yet constituted a trend reversal. Gold prices triggered short covering after regaining the $4,600 level and the 100-hour moving average, but the subsequent rebound encountered significant resistance near $4,650, corresponding to the 38.2% Fibonacci retracement level from the April high. The RSI reading is around 58, indicating strong momentum but not yet overbought; the MACD remains in slightly negative territory, suggesting that the bulls' attempt is still tentative. The key technical conclusion is that a decisive close above $4,651 is needed to open up room for further upward movement, with the next target at the 50% retracement level of $4,696.
On the downside, if the price breaks below the $4,539 support level, it will open up room for a test of the $4,460 liquidity low.
The core contradiction in the short term
There is significant tension in the underlying logic of today's market trend.
The bulls are supported by: marginal easing in the Iran negotiations, a weaker dollar, and ISM data reinforcing expectations that the Fed will find it difficult to raise interest rates. The market's probability of at least one rate cut in 2026 has surged from 1.3% to over 15%, which directly limits the dollar's rebound.
The pressure on the bears comes from the following: news of the Iran negotiations also lowered oil prices. If energy prices continue to fall, inflation expectations will cool down, which will weaken the anti-inflation logic of gold. At the same time, the Federal Reserve maintained a hawkish stance this week, and the market has basically given up on the expectation of interest rate cuts this year. The high-interest-rate environment continues to put pressure on gold, a non-interest-bearing asset.
The weekend factor cannot be ignored either. Gold trading will be suspended on May 2nd and 3rd, and positions held over the weekend will be subject to the risk of overnight gaps due to sudden changes in the situation in Iran. Some institutions tend to actively reduce their exposure before the close, which will create additional selling pressure at the end of the trading day.
Conclusion
$4651 is the most crucial short-term watershed today. If the price can break through and hold above this level with significant volume in the late session, the rebound has the potential to continue into next week. However, if the price fluctuates below this level or even falls back below $4600, this rebound is likely just a technical oversold correction, and the price will face renewed pressure after the market reopens on Monday. The progress of the Iran negotiations will be the biggest variable determining the direction of the market.
At 01:41 Beijing time, spot gold was trading at $4,630.82 per ounce, up 0.20%.
Firstly, there's the data. The ISM Manufacturing PMI remained at 52.7% in April, lower than the market expectation of 53.1%, while the price sub-index surged from 78.3 to 84.6. This combination of "lower-than-expected growth and higher-than-expected inflation" directly ignited the stagflation trading logic, and short sellers began to cover their positions.
Secondly, there's the geopolitical aspect. Iran's state news agency reported that Tehran submitted a new proposal for negotiations with the United States to Pakistani mediators on Thursday. This news significantly improved market risk appetite, putting downward pressure on the US dollar index, which fell by approximately 0.3%.
Kitco Metals senior analyst Jim Wyckoff commented, "Iran's signals of a willingness to resume dialogue could mark a breakthrough in the peace process, boosting investor risk appetite, putting pressure on the dollar index, and pushing up gold prices."
With two positive factors combined, spot gold rose from an intraday low of $4,559 to around $4,636, while June gold futures rose 0.4% to $4,649. Despite this, gold still recorded a weekly decline of approximately 1.6%.
Technical aspects: Key resistance is imminent, a breakout still needs confirmation.
(Spot gold daily chart source: FX678)
This rebound is corrective in nature and has not yet constituted a trend reversal. Gold prices triggered short covering after regaining the $4,600 level and the 100-hour moving average, but the subsequent rebound encountered significant resistance near $4,650, corresponding to the 38.2% Fibonacci retracement level from the April high. The RSI reading is around 58, indicating strong momentum but not yet overbought; the MACD remains in slightly negative territory, suggesting that the bulls' attempt is still tentative. The key technical conclusion is that a decisive close above $4,651 is needed to open up room for further upward movement, with the next target at the 50% retracement level of $4,696.
On the downside, if the price breaks below the $4,539 support level, it will open up room for a test of the $4,460 liquidity low.
The core contradiction in the short term
There is significant tension in the underlying logic of today's market trend.
The bulls are supported by: marginal easing in the Iran negotiations, a weaker dollar, and ISM data reinforcing expectations that the Fed will find it difficult to raise interest rates. The market's probability of at least one rate cut in 2026 has surged from 1.3% to over 15%, which directly limits the dollar's rebound.
The pressure on the bears comes from the following: news of the Iran negotiations also lowered oil prices. If energy prices continue to fall, inflation expectations will cool down, which will weaken the anti-inflation logic of gold. At the same time, the Federal Reserve maintained a hawkish stance this week, and the market has basically given up on the expectation of interest rate cuts this year. The high-interest-rate environment continues to put pressure on gold, a non-interest-bearing asset.
The weekend factor cannot be ignored either. Gold trading will be suspended on May 2nd and 3rd, and positions held over the weekend will be subject to the risk of overnight gaps due to sudden changes in the situation in Iran. Some institutions tend to actively reduce their exposure before the close, which will create additional selling pressure at the end of the trading day.
Conclusion
$4651 is the most crucial short-term watershed today. If the price can break through and hold above this level with significant volume in the late session, the rebound has the potential to continue into next week. However, if the price fluctuates below this level or even falls back below $4600, this rebound is likely just a technical oversold correction, and the price will face renewed pressure after the market reopens on Monday. The progress of the Iran negotiations will be the biggest variable determining the direction of the market.
At 01:41 Beijing time, spot gold was trading at $4,630.82 per ounce, up 0.20%.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
