Gold – XAU/USD Analysis – June 08, 2021

EMA Crossover Supports Buying!

Gold prices extended their gains for the second consecutive session and reached above the $1900 level. On Monday, the U.S. Dollar came under pressure as investors awaited the data about U.S. inflation scheduled to release later this week. The investors wanted to take a clue about Fed’s decision about tapering the economic support measures. The U.S. Dollar Index fell on Monday and extended its losses for the 3rd consecutive session to reach $89.96. Meanwhile, the U.S. Treasury Yields on 10-year note also remained flat throughout the day at 1.56%. On Sunday, U.S. Treasury Secretary Janet Yellen said that President Joe Biden’s 4 trillion spending proposal would prove beneficial and positive for the country even though it could raise the interest rates. The former Federal Reserve Chair added that the proposed plan from the U.S. President would total about 400 billion every year. However, she argued that this level of spending might not be enough to create an inflation over-run.

Yellen added that if, after the pandemic, the economy ended up with an environment with slightly higher interest rates, it would be a plus for society and the Federal Reserve. Yellen continued that the U.S. economy has been fighting with too-low inflation as well as too low interest rates for about a decade. She proposed that if getting back to a typical interest rate environment requires a little bit of extreme inflation and interest rates, then it would not be a bad thing rather a good thing.

The comments from Yellen added further pressure on the U.S. dollar that was already declining. Hence, the yellow metal rose for the second consecutive session on the board even without any macro-economic data release from the economic docket.

On the other hand, according to the Johns Hopkins University, the global coronavirus case count has surged above 173.1 million, with the death toll peaked above 3.72 million. The safe-haven yellow metal continued its upward momentum on the back of another variant of the virus in Vietnam. The Health Minister of Vietnam, Nguyen Thanh Long, said that the scientist had examined a new hybrid of variants first found in India and the U.K. He added that the lab tests have suggested that the new hybrid variant might spread faster and easier than the other versions of the coronavirus.

As the virus reproduces, it develops small genetic changes and results in a new virus variant. The coronavirus has been creating new variants since it was first detected in China in late 2019. The World Health Organization has recorded four variants of the coronavirus as “variants of concern,” including the first found in the U.K. and India, plus the others that were detected in South Africa and Brazil. The news that a potential new hybrid variant of the coronavirus that appeared in Vietnam also added fears and raised the safe-haven appeal in the market that ultimately supported the rising prices of the precious metal on Monday.

Gold Intraday Technical Level

Support Resistance

1890.51 1893.61

1889.33 1895.53

1887.41 1896.71

Pivot Point: 1892.43

Gold - XAU/USD - Technical Outlook

The yellow metal gold is trading at a 1,898 level, crossing above the 20 and 50 exponential moving averages at a 1,889 level. At the moment, these exponential moving averages are extending support at 1,884 area, and closing of gold's price above this EMA is still adding buying pressure on gold. Other technical tools like RSI and MACD support buying trends in gold, and bullish sentiment dominates among investors. An upward trendline supports gold at the 1,895 level on the hourly timeframe, and break out of this level opens selling bias until 1,891 and 1,882. At the same time, resistance holds at 1,903 and 1,912 levels. All the best!