Gold – XAU/USD Analysis - May 20, 2021

Unemployment Claims in Focus!

Gold prices were closed at $1866.20 after placing a high of $1891.25 and a low of $1852.50. Gold edged to its 4-months high level during early trading hours on Wednesday as the U.S. Treasury yields and dollar rose after minutes from the Federal Reserve meeting indicated the central bank might be crawling closer to taper talks. The U.S. Dollar Index (DXY) that measures the greenback's value against the basket of six major currencies rose after three days of losses and reached a $90.29 level. The U.S. Treasury yields also rose on Wednesday and came 1.692%, strengthening the greenback and weighed on the yellow metal prices.

On Wednesday, the U.S. Federal Reserve released its minutes from April's meeting and said that a solid pickup in economic activity would justify discussions about contracting monetary policy. According to the summary of the meeting, many Fed officials suggested that if the economy continued making rapid progress toward goals set by the committee, then it might be appropriate at some time in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.

Markets participants have been watching closely for clues about when the central bank might start tapering its bond purchases currently at $120 billion a month. Fed officials have been committed to not changing policy until their economic goals have been hit, particularly regarding employment and inflation.

This was the first time when discussions in the minutes exposed that central bankers have pointed out that a reduction in purchases could happen ahead; however, no timetable was provided. After the release of minutes, the U.S. dollar and government bond yields remained higher on the session that weighed on the yellow metal prices. On Wednesday, the Federal Reserve Bank of Atlanta President Raphael Bostic said that he was looking closely at what he anticipates to be volatile economic data in coming months for signs the economy has made substantial progress toward the Fed's goals of full employment and low inflation.

Gold Intraday Technical Level

Support Resistance

1848.71 1887.46

1831.23 1908.73

1809.96 1926.21

Pivot Point: 1869.98

Gold - XAU/USD - Technical Outlook

On Thursday, the precious metal gold continues trading strongly bullish at 1,876, having violated the intraday resistance level of 1,871 on the daily timeframe. On the 4-hour chart, the pair is gaining support at 1,869 level now and resistance at 1,889. Currently, gold has entered the buy zone, underpinned by 20 & 50 periods EMA around 1,869. The RSI is holding at 55.23 and the MACD at 1.512, supporting an upward trend in gold. The primary focus of investors will remain on the 1,869 pivot point level as above this bullish bias prevails. Later today, the U.S. Jobless Claims will remain in highlights to drive further price action in the market. All the best!