Gold – XAU/USD Analysis - May 10, 2021

Weaker U.S. Non-Farm Payroll Underpins Gold

Gold prices were closed at $1831.95 after placing a high of $1844.40 and a low of $1813.45. Gold rose on Friday to its highest level since February 11 above $1840 and extended its gains for 3rd consecutive sessions. Gold remained strong this week and posted the biggest weekly gain since mid-February due to renewed weakness in the U.S. dollar. On Friday, the U.S. Dollar Index (DXY) that measures the greenback's value against the basket of six major currencies plunged to its lowest since February 26. The DXY reached a low of $90.19 after a poor-than-expected NFP economic data release.

At 17:30 GMT, the Average Hourly Earnings increased to 0.7% against the forecasted 0.0% and supported the U.S. dollar that capped further gains in gold. In April, the most awaited Non-Farm Employment Change declined to 266K against the projected 990K and weighed on the U.S. dollar that pushed gold prices higher. In April, the Unemployment Rate increased to 6.1% that was previously predicted as 5.8%, weighed on the U.S. dollar, and added further gains in the yellow metal. At 19:00 GMT, the Final Wholesale Inventories declined to 1.3% against the expected 1.4% and supported the U.S. dollar that capped further gains in XAU/USD. The Mortgage Delinquencies came in as 6.38% in comparison to the previous 6.73%.

However, the U.S. Treasury yield on a 10-year note also fell on Friday to its lowest level since March 4 during the first half of the day; however, it made an impressive recovery and rose sharply to $1.58% in the second half of the day. The Richmond Federal Reserve President Thomas Barkin said that the disappointing job reports from April showed a bottleneck of workers moving into employment, not a weakening recovery. He further added that he was hopeful that the U.S. was on the brink of completing the recovery.

Barkin said that the demand side of the employment was not the issue. Instead of the supply side, many factors were holding back hiring to jobs, including fear of the coronavirus, child care, retirements, and the availability of unemployment benefits. Meanwhile, U.S. President Joe Biden argued that the American Rescue Plan of worth $1.9 trillion stimulus package was failing in achieving its goals of revitalizing the economy after the jobs reports issued by the Bureau of Labor Statistics suggested a decline in the hired number of Americans in April. Furthermore, U.S. Treasury Secretary Janet Yellen said that the fiscal tools of the department to hold the national debt from violating its congressionally mandated limit might be exhausted soon this summer.

Gold Intraday Technical Level

Support Resistance

1833.51 1838.86

1830.13 1840.83

1828.16 1844.21

Pivot Point: 1835.48

Gold - XAU/USD - Technical Outlook

On Monday, the precious metal gold is trading with a solid bullish bias at 1,838 level, having disrupted an ascending triangle pattern on the daily chart. On the higher side, the violation of the 1,800 level has triggered a robust dramatic buying trend in gold; therefore, the precious metal is heading towards the next resistance level of 1,856 level. The precious metal has closed three white soldiers pattern that's keeping gold's trading sentiment strongly bullish on the daily timeframe. The EMA and RSI are in support of a buying trend today. Gold's next resistance stays at 1,840 and 1,856, while the support remains at 1,833 and 1,819 levels. All the best!