Gold – XAU/USD Analysis - May 26, 2021

Symmetrical Triangle Violation

Gold prices were closed at $1898.85 after placing a high of $1901.15 and a low of $1873.30. Gold reached its highest since the first week of January and finally broke through the resistance level of $1900 on Tuesday. The weaker dollar caused the recent surge in gold prices after comments from the U.S. Federal Reserve officials calmed fears about inflation. The U.S. dollar faced massive pressure on Tuesday and fell to its new low level after the Federal Reserve officials reaffirmed a dovish monetary policy stance that eased inflation concerns. The dollar fell to 4 and a half month lowest level at 89.5 on Tuesday after investors weighed the soothing words by Fed that faded the tapering worries for the time being.

The U.S. Treasury yield on benchmark 10-year note also fell on Tuesday and reached 1.57%that added further decline in the greenback prices. The treasury yields fell for the fourth consecutive session as participants believed that price pressures would be stable for the rest of the year.

At 18:00 GMT, The Housing Price Index rose to 1.4% against the expected 1.1% and supported the U.S. dollar and further capped gains in gold prices. The S&P/CS Composite-20 HPI for the year also surged to 13.3% against the expected 12.6% and supported the U.S. dollar, and limited the rising prices of gold.

At 18:59 GMT, the Richmond Manufacturing Index declined to 18 against the projected 19 and weighed on the U.S. dollar that pushed gold. At 19:00 GMT, the CB Consumer Confidence in May fell to 117.2 against the forecasted 119.0 and weighed on the U.S. dollar and added further gains in gold prices. The New Home Sales dropped to 863K against the predicted 950K and weighed on the U.S. dollar, and added further upward momentum in yellow prices.

The President of the Federal Reserve Bank of Chicago, Charles Evans, said that the recent rise in U.S. inflation was unlikely to lead to the undesirably high inflation that some notable economists warned about. Instead, he thinks that inflation was temporary. He reiterated his support for the super-easy monetary policy. He said that he had not seen anything yet to persuade him to change his full support to the existing monetary policy.

Furthermore, the Federal Reserve Vice Chair of Supervision, Randal Quarles, said that the U.S. financial regulatory agencies were working together on addressing issues related to cryptocurrency. He added that the overall risks to financial stability were moderate; however, there were still some risks around non-bank financial institutions.

Gold Intraday Technical Level

Support Resistance

1881.05 1908.90

1863.25 1918.95

1853.20 1936.75

Pivot Point: 1891.10

Gold - XAU/USD - Technical Outlook

The strong bullish bias dominates the precious metal gold as its prices soared from 1,889 to 1,908. Currently, the precious metal is trading at 1,906 level, facing strong resistance at 1,908 level. The bullish breakout of 1,908 exposes the metal price towards the next resistance area of 1,929 level. The leading indicators such as RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) is support solid bullish bias in gold. Gold’s immediate support holds around 1,891 today, and bullish bias still dominates. All the best!