Technical Analysis

Gold – XAU/USD Analysis – June 11, 2021

Prelim UoM Consumer Sentiment in Focus!

The precious metal edged higher and ended its day green after declining in the early trading hours. During European trading hours, the yellow metal remained under pressure and dropped below the $1872 level. However, gold retreated and gathered strength against the U.S. dollar on Thursday during late trading hours after the release of U.S. inflation data.

The U.S. inflation jumped to its highest level since 2008 in May as the world’s largest economy was rebounding strongly from the pandemic crisis. According to the U.S. Bureau of Labor Statistics, the CPI rose in May at an annual rate of 5%, up from April’s 4.2%. Since January, inflation has been steadily rising when it was at 1.4%.

Markets in the U.S. have seen a surge in the fears of rising prices with investors concerning that pent-up demand and the disruptions in the supply chain would create inflationary pressures. Hence they forced central bankers at the Federal Reserve to decrease their stimulus program. However, after the release of better-than-expected data, the U.S. stock rallied and weighed on the greenback. The traders projected that the inflationary push would be temporary; this will allow Fed to put off tapering a bond-buying policy that has been pumping up money to the global markets.

The U.S. Dollar Index that measures the greenback value against the basket of six major currencies fell on Thursday and continued its bearish momentum to reach 89.99 level. On the other hand, the benchmark Treasury yield on a 10-year note extended its slide for the 4th consecutive session and fell sharply on Thursday to reach 1.43%. At 17:30 GMT, the Consumer Price Index from May surged by 0.6% against the forecasted 0.4% and supported the U.S. dollar. The Core CPI from May also rose by 0.7% against the expected 0.5% and supported the U.S. dollar. The Jobless Claims from last week surged to 376K against the expected 370K and weighed on the U.S. dollar. At 23:00 GMT, the Federal Budget Balance dropped to -132.0B against the expected -245.0B and weighed on the U.S. dollar.

The continued economic recovery from the post-pandemic boosted demand pushed the U.S. consumer prices in May to the highest level since 2008. Whereas, the weekly jobless claims also fell to their lowest level in nearly 15 months but came in high against the predicted figure and weighed on the U.S. dollar that pushed gold higher.

Gold Intraday Technical Level

Support Resistance
1889.30 1901.70
1883.10 1907.90
1876.90 1914.10
Pivot Point: 1895.50

Gold – XAU/USD – Technical Outlook

On Friday, the precious metal gold is trading with a bullish bias at 1,899, having crossover above the downward trendline. On the 4- hour timeframe, the downward trendline was extending solid resistance to gold at 1,897 level, and this same level is now working as a support for gold. Gold’s immediate resistance stays at the 1,903 level, and a bullish breakout of this level exposes gold’s prices towards the next resistance area of 1,910 and 1,916. The MACD is closing histograms over 0 levels that’s supporting buying trend in gold. The 50 periods EMA is also keeping an upward trend in gold. After CPI figures yesterday, the focus shifts to the UoM Consumer Sentiment as this typically drives excellent price action in the market. Good luck!