Technical Analytics Report

XAU/USD: Fundamental Analysis Report

XAU/USD: Fundamental Analysis Report 19 May 2021

Current trend: development of upward dynamics

Gold price reached the resistance level of 1871.00 amid falling USD to the lowest since the end of February. The positive dynamic is associated with investors’ fears about the growing inflation in the US and the USD Index fall, which dropped by 0.47% to the level of 89.740 yesterday. 

USD weakening is also related to Friday’s negative macroeconomic statistics. Thus, US Industrial Production for April rose by 0.7% instead of 1.0%, as analysts expected. Consumer Sentiment Index from the University of Michigan for May (preliminary data) came out at 82.8, which is less than the forecast of 90.4. New Home Starts for April amounted to 1.569M against the forecast of 1.710M. Based on the data obtained, it can be concluded that the US economy is entering a phase of correction after a rapid recovery period this winter. 

Meanwhile, Vice President of the US Federal Reserve Richard Clarida said that the regulator will respond to high inflation, if necessary but he stressed that now is not the time to start talking about raising interest rates. To assess the situation, time and careful analysis are needed before the department embarks on a course of tightening monetary policy. Thus, the indecisiveness of the US Federal Reserve leads to a weakening of the American currency and an overflow of capital into gold. 

Support and Resistance

The long-term trend is upward. Gold left the price channel upwards, breaking through the sloping resistance line. Growth is possible to the maximum of 2020 around 2060.00. Buyers are now testing the resistance level of 1871.00. Its breakout allows growth to 1950.00 but if this level is held, a correction to the support of 1814.00 is possible. 

·         Resistance levels: 1871.00, 1950.00.

·         Support levels: 1814.00, 1767.00. 

Trading Tips

Long positions may be opened above 1880.00 with the target at 1950.00 and stop loss 1858.00. Implementation period: 7–9 days. 

Short positions may be opened below 1814.00 with the target at 1767.00 and stop loss 1829.00. 

Scenario

Timeframe: Weekly

Recommendation: Buy Stop

Entry Point: 1880.05

Take Profit: 1950.00

Stop Loss: 1858.00

Key Levels: 1767.00, 1814.00, 1871.00, 1950.00 

Alternative Scenario

Timeframe: Weekly

Recommendation: Sell Stop

Entry Point: 1813.95

Take Profit: 1767.00

Stop Loss: 1829.00

Key Levels: 1767.00, 1814.00, 1871.00, 1950.00


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