Technical Analysis

Gold – XAU/USD Analysis - May 27, 2021

By LonghornFX Technical Analysis
May 27, 20213 min

Resistance Becomes Support!

Gold prices were closed at $1896.15 after placing a high of $1913.25 and a low of $1890.75. After rising to its multi-month high level and reaching above the $1910 level, gold faced a correction in price and reversed its course on Wednesday. The U.S. Dollar Index that measures the greenback value against the basket of six major currencies surged on Wednesday and reached above 90 levels, adding losses in the yellow metal prices. However, the U.S. Treasury yields on a 10-year note continued their bearish momentum for the 5th consecutive session and fell to 1.55%.

The U.S. dollar rallied against its rivals for the first time this week as Federal Reserve officials continued pushing down the prospects of rising inflation. The Fed Vice Chair for Supervision Randal Quarles signaled the U.S. Central bank's plans to open talks on easing its bond-buying program as the economy moved towards recovery and prices were increasing. Quarles said it would be necessary for Federal Reserve to begin the discussion in the coming months about the pans to reduce its massive bond purchases as the economy was continuously recovering from the damage triggered by the pandemic.

Meanwhile, Vice Chair Richard Clarida also said that the Fed could limit inflation and engineer a soft-landing without throwing the economy's recovery off track. On Monday, Fed Coard Governor Lael Brainard and the President of the St. Lois Fed, James Bullard, also reiterated the dovish monetary policy stance. The shifting tone at the central bank reflected by many fed officials made the U.S. dollar strong across the board. The three main indexes at Wall Street Journal also moved higher, with Dow Jones Industrial Average rising by 0.03%, S&P 500 increasing by 0.19%, and the NASDAQ Composite rising by 0.59%.

Furthermore, on Tuesday, Washington called for a new round of studies conducted with independent and international experts at the World Health Assembly. The U.S. was urging WHO to trace the origin of coronavirus and demanded a completely transparent process from China.

According to WHO, the global coronavirus cases fell by 14% last week, but the overall infections remained high at near 168 million. Whereas the U.S. hit a big vaccine milestone as half of the adult population is now fully vaccinated.

Gold Intraday Technical Level

Support Resistance

1886.85 1909.35

1877.55 1922.55

1864.35 1931.85

Pivot Point: 1900.05

Gold - XAU/USD - Technical Outlook

The precious metal gold is trading at a 1,899 level, exhibiting a bearish correction below a 1,912 resistance level. On the 4-hour timeframe, 1,890 level is the same old resistance level that was violated when gold crossed over ascending triangle pattern. At the moment, this level of 1,890 is supporting gold, and a bullish bounce off over this level exposes the pair towards a 1,912 resistance level. The leading indicators such as RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) support a solid bullish bias. Gold's immediate support holds around 1,891 today, and bullish bias still dominates. All the best!


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