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Technical Analysis

Gold – XAU/USD Analysis – May 04, 2021

20 & 50 EMA Supports Bullish Trend!

Gold prices closed at $1792.25 after placing a high of $1798.30 and a low of $1766.75. Gold rose on Monday and reached its highest level since 25th February. More than 1% jump in precious metal on Monday was driven by the recent declining U.S. dollar and U.S. Treasury yields.

The U.S. Dollar Index that gauges the dollar value against the basket of six major currencies dropped on Monday to 90.87 level. The Benchmark U.S. Treasury yieldon10-year note fell for the third consecutive session and reached below 1.60% level at 1.578%.

A combination of declining U.S. Treasury yields along with the under-pressure U.S. dollar and the amount of fiscal and monetary stimulus in the market kept the precious metal higher. Gold also found support from the data showing U.S. manufacturing activity grew at a slower pace in April.

At 18:45 GMT, Final Manufacturing PMI from the U.S. remained flat with the expectations of 60.5. At 19:00 GMT, the ISM Manufacturing PMI in April declined to 60.7 against the projected 65.0 and weighed on the U.S. dollar, which added more gold prices. Construction Spending in March dropped to 0.2% against the forecasted 1.7% and weighed on the U.S. dollar and pushed gold higher. ISM Manufacturing Prices rose to 89.6 against the projected 86.0 and supported the U.S. dollar that capped further gains in the yellow metal.

On Monday, the New York Fed Bank President, John Williams, said that the U.S. economy was poised to grow at the fastest rate in decades this year as it rebounds from the crisis caused by the coronavirus pandemic. However, Williams continued that Federal Reserve would not consider pulling back its support from the economy as financial conditions had not yet reached those levels.

Fed officials kept the interest rates near zero and continued bond purchasing worth$120 billion a month and said that these would not change until substantial further progress is not seen. Williams was not concerned about inflation getting too high and said that financial support and vaccinations were helping the economy to recover, but it was unlikely that the boom will lead to higher inflation. These comments from Fed weighed on the U.S. dollar and supported gains in gold.

Furthermore, the Federal Reserve senior loan officer survey results showed that Bank eased household loans and commercial and industrial loans. The survey also suggested that demand for construction and land development loans was strong whereas, demand for commercial and industrial loans for large & medium-sized firms was weak. The survey also weighed on the U.S. dollar and pushed gold prices higher.

Gold Intraday Technical Level

Support Resistance
1773.24 1804.79
1754.22 1817.32
1741.69 1836.34
Pivot Point: 1785.77

Gold – XAU/USD – Technical Outlook 

The precious metal gold is trading with a bullish at 1,785 level, facing immediate resistance at 1,794 level. On the 4-hour timeframe, the precious metal gold has formed series of bearish candles, which in technical terms are known as three black crows and suggest bearish sentiment among gold traders. On the higher side, gold has the potential to go after the next resistance area of 1,797. On the 4-hour timeframe, gold continues to hold over 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. Gold’s immediate resistance stays at 1,792 and 1,797, while support stays at 1,781 and 1,773. All the best!