Gold – XAU/USD Analysis - May 03, 2021

20 & 50 EMA Supports Bullish Trend!

Gold prices were closed at $1768.60 after placing a high of $1772.85 and a low of $1763.40. Gold extended its losses on Friday and dropped for 2nd consecutive session. However, it managed to post gains for the month. Gold closed April with about 3% gains after declining for the previous three straight months. This was the first monthly gain recorded by precious metal for 2021. At the same time, gold dropped and posted losses for the week that closed on 30th April and extended its losses. The yellow metal was down on Friday amid the strong come back in greenback driven by the 10-year U.S. Treasury yield. On Friday, the U.S. Dollar Index that measures the greenback's value against the basket of six major currencies rose sharply and reached the $91.32 level, its highest in 5-days.

The U.S. Treasury yield and U.S. Dollar Index gained on the back of robust economic data and dented the appeal for safe-haven metal on Friday. At 17:30 GMT, the Core PCE Price Index surged to 0.4% against the expected 0.3%, supported the U.S. dollar, and weighed on gold. The Employment Cost Index for the quarter rose to 0.9% against the estimated 0.7% and supported the U.S. dollar that added pressure on gold prices. Personal Income also increased to 21.1% compared to the forecasted 20.1% and helped the U.S. dollar and added losses in gold prices.

Personal Spending in March declined to 4.2% against the estimated 4.3% and weighed on the U.S. dollar that capped further downside in gold. At 18:45 GMT, Chicago PMI surged to 72.1 in April against the forecasted 65.4 and supported the U.S. dollar that added additional pressure on gold. At 19:00 GMT, the Revised UoM Consumer Sentiment in April improved to 88.3 from the predicted 87.3 and supported the U.S. dollar that kept gold under pressure. The Revised UoM Inflation Expectations in April declined to 3.4% compared to the previous month's 3.7%.

Apart from solid macroeconomic data, the U.S. dollar was also rising because of the renewed hopes that the country might start recovering soon at a faster pace on the back of an announcement from the White House that about one-third of the U.S. population were fully vaccinated.

According to the Johns Hopkins University, the global cases count reached above $150 million, and the death toll reached 3.15 million. Whereas, the rate of cases in the United States continued to fall as the seven-day average of new coronavirus deaths in the U.S. declined. The analysts suggested that this average rate of recent deaths in the U.S. was the lowest since last July. The country's worsening infection and death rate could be attributed to the successful vaccine campaigns and supported the U.S. dollar that added pressure on gold prices.

On the other hand, the losses in gold remained limited due to the rising risk-off market sentiment. The Former U.S. Secretary of State Henry Kissinger warned that the competition between the U.S. and China poses the biggest problem for the world. He added that if both countries failed to improve their conflicts between them, this could push the situation towards Cold War between the world's two largest economies. These comments from a former U.S. official raised calls for risk-off market sentiment and kept the losses in precious metal limited.

Gold Intraday Technical Level

Support Resistance

1755.19 1790.19

1737.52 1807.52

1720.19 1825.19

Pivot Point: 1772.52

Gold - XAU/USD - Technical Outlook

The precious metal gold is trading with a bullish at 1,775 level, facing immediate resistance at 1,777 level. On the 4-hour timeframe, the precious metal gold has formed series of bullish candles, suggesting a bullish sentiment among gold traders. On the higher side, gold has the potential to go after the next resistance area of 1,7903. On the 4-hour timeframe, gold is holding above the 20 & 50 periods EMA, which extends solid support around 1,763. Besides, the RSI and MACD exhibit bullish bias as the RSI and MACD holds in a buy zone. On Monday, Gold’s immediate resistance stays at 1,782 and 1,789, while support stays at 1,777 and 1,763. All the best!