XAU/USD outlook: Gold eyes $2000 barrier as bulls accelerate in May on growing inflationary pressure

Slobodan Drvenica Windsor Brokers

Gold

Spot Gold keeps firm tone and consolidating under new nearly three-month high ($1912) on Monday, supported by weak dollar while growing inflationary pressures lift gold’s appeal as the metal is used as a hedge against inflation.

The other supportive factor for the yellow metal would be monetary policy as remains firmly dovish and refusing to start changing the policy in response to rising inflation, arguing that the latest increase in consumer prices consumer prices is transitory.

Gold is on track for the second consecutive bullish monthly close as it rallied nearly 8% in May and also on course for the biggest monthly gains since July 2020.

Psychological $2000 barrier is coming in focus with a number of analysts and investors seeing possibility of stronger advance.

May’s massive bullish monthly candle is expected to underpin further action, which may face headwinds from next target at $1922 (Fibo 61.8% of $2074/$1676 pullback) as weekly stochastic is strongly overbought. Dips are expected to provide better levels to re-enter bullish action, with broken weekly cloud top ($1877) expected to contain.

Res: 1912; 1922; 1959; 1980.
Sup: 1900; 1887; 1875; 1855.

Interested in XAU/USD technicals? Check out the key levels

1. R3 1936
2. R2 1921.04
3. R1 1912.24
PP 1897.28
1. S1 1888.48
2. S2 1873.52
3. S3 1864.72

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD looks weak below 1.1800

EUR/USD has slipped back under pressure, breaking through the 1.1800 support and drifting towards the weekly lows near 1.1770 ahead of the opening bell in Asia. The move reflects renewed strength in the US Dollar, with steady geopolitical tensions keeping its demand firm. Moving forward, the release of the German labour market report and flash inflation figures should keep European investors entertained on Friday.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.