Gold – XAU/USD Analysis - May 24, 2021

20 & 50 EMA Supports Bullish Trend!

Gold prices were closed at $1881.85 after placing a high of $1890.15 and a low of $1870.30. Gold extended its gains on Friday and reached its highest since the first week of January. Gold continued its bullish streak for the third consecutive week amid the weak U.S. dollar and recent crypto crash. The U.S. Dollar remained high against its major rivals on Friday, but it remained around its recent lows as the U.S. Treasury yields on benchmark 10-year note slipped for the day and reached 1.613%.

The U.S. Dollar Index reached 90.03 after declining to 89.65 during the day, which was the lowest since 25th February. It seems like investors were not worried about monetary tightening at the moment as the U.S. bond yields were declining a little, and the yellow metal was gaining from it. Gold has been on solid foot after the release of minutes from the Federal Reserve of its latest meeting that mentioned possible future discussion on reducing stimulus that prompted the speculation over a potential increase to interest rates.

Federal Reserve also acknowledged the rising pressure around prices as the disrupted U.S. supply chain struggled to cope with the increased demand after reopening the economy from months of pandemic –suppression. However, Fed also said that this inflationary pressure was temporary and it will fade away as the economy moves towards full recovery from the pandemic. Fed also noted that there was no need to raise interest rates at the moment. After this, gold started gaining due to its status as a hedge against inflation, and U.S. treasury yields starting declining, which added further upside pressure on the yellow metal and pushed it towards the $1900 level. This was the first attempt of gold after January to return to the $1900 level.

On the data front, at 18:45 GMT, the Flash manufacturing PMI for May increased to 61.5 against the forecasted 60.0 and supported the U.S. dollar that capped further gains in yellow metal prices. The Flash Services PMI also rose to 70.1 against the forecasted 64.3 and helped the U.S. dollar that limited the rising prices of gold. At 19:00 GMT, the Existing Home Sales in April declined to 5.85M against the projected 6.09M and weighed on the U.S. dollar, which added further gold prices.

According to President of San Francisco Federal Reserve, Mary Daly, the factors pushing U.S. inflation higher were likely to recede at the start of 2022. She added that a sequence of these factors will probably continue to appear throughout the end of the year and will start to roll off at the start of next year. Daly said that monetary policy was at a good place at the moment and urged policymakers to remain patient on the subject of 8 million unemployed people as the economy was making progress towards recovery. After these comments, the U.S. dollar saw some strength and added pressure on rising prices of gold on Friday.

Gold Intraday Technical Level

Support Resistance

1864.24 1884.49

1854.12 1894.62

1843.99 1904.74

Pivot Point: 1874.37

Gold - XAU/USD - Technical Outlook

The precious metal gold is trading with a bullish at 1,882 level, facing immediate resistance at 1,889. On the 4-hour timeframe, the precious metal gold has formed series of neutral candles, which in technical terms are known as doji and spinning top. These candles suggest indecision among gold traders. On the higher side, gold has the potential to go after the next resistance area of 1,889. On the 4-hour timeframe, gold continues to hold over 20 & 50 periods EMA, which extends solid support around 1,876. Besides, the RSI and MACD exhibit bullish bias as the RSI and MACD stays in a buy zone. Gold’s immediate resistance stays at 1,889 and 1,897, while support stays at 1,874 and 1,863. All the best!