Gold – XAU/USD Analysis – June 02, 2021

20 & 50 EMA Crossover

Gold prices were closed at $1901.35 after placing a high of $1919.10 and a low of $1894.50. Gold rose during the early trading session on Tuesday and reached near $1920 but failed to sustain there and dropped in the second half on Tuesday amid the comeback in the U.S. dollar. The U.S. dollar index rose on Tuesday after falling for three consecutive sessions and gathered strength against other rival currencies that pushed it to 89.94 level. Whereas, the U.S. Treasury yields on a 10-year note also rose to 1.637%, added further support to the U.S. dollar, and made it more robust. The strength in the greenback weighed on the yellow metal prices and dragged them towards the $1890 level.

On the data front, at 18:45 GMT, Final Manufacturing PMI surged to 62.1 against the forecasted 61.5 and supported the U.S. dollar that added losses in gold prices. At 19:00 GMT, the ISM Manufacturing PMI rose to 61.2 against the projected 60.8 and supported the U.S. dollar that added weight on the yellow metal. The Construction Spending dropped to 0.2% against the estimated 0.5% and weighed on the U.S. dollar that further caped loss in gold. The ISM Manufacturing Prices surged to 88.0 against the projected 88.9 and weighed on the U.S. dollar that limited the loss in the yellow metal.

On Tuesday, Federal Reserve Governor Lael Brainard said an unusual imbalance between supply and demand in the labor market held back the hiring rebound, but the trend should not last long. She added that the labor shortage would reverse as the economy was healing continuously. She said that the labor shortages were increasing due to childcare, virus fears, and the Unemployment incentive benefits. The scarcity will likely fade away by the fall as vaccination continues and the UI benefit lapses. She concluded that the goals set by Fed for employment were far from reaching but should pick up in the coming months.

Meanwhile, on Tuesday, the Fed vice chair for supervision Randal Quarles said that a recent jump in inflation would prove transitory, even as the fed preferred measure for the pace of price increases jumped in April to 3.1%, well above the Fed's 2% target. He added that a monthly high inflation reading does not necessarily lead to durable high inflation. On U.S. – China front, a Chinese diplomat urged U.S. companies to confidently tell the story of win-win cooperation between China and the U.S., as the world's two biggest economies were locked in a trade and technology war.

According to a statement published by the Foreign Ministry, China's Vice Foreign Minister, Xie Feng, said that it was hoped that Disney, among other U.S. firms in China, could confidently tell the story of win-win China-US cooperation. He added that the relationship between China and the U.S. was at a critical crossroads. It will be in the interest of both China and the U.S. and the rest of the world to promote China's sound and stable development – U.S. relationship.

Gold Intraday Technical Level

Support Resistance

1906.20 1914.75

1901.25 1918.35

1897.65 1923.30

Pivot Point: 1909.80

Gold - XAU/USD - Technical Outlook

The yellow metal gold is trading at a 1,898 level, having crossed beneath the series of 20 and 50 EMA levels. These EMA lines are extending resistance at 1,903 area, and closing gold's price below these adds selling pressure on gold. The indicators like RSI and MACD are demonstrating a robust bearish sentiment among investors. However, an upward trendline is also extending it support around 1,897 level. Gold's following support levels hold around 1,891 and 1,882, with resistance at 1,903 and 1,912 levels. All the best!