Fundamental Analysis for the Week of May 24th – 28th:
1. As the US economic recovery continues to remain slow, this puts constraints on the Federal Reserve to lower or alter its current monetary policy. The weak labour and consumer markets also show that its recovery rate is far from originally expected and would require the aid of a strong monetary policy stimulus. For this week we should continue to pay attention to changes in the figures released in the US and the Fed’s stance and speech towards their views on the economy.
2. The pandemic situation in India continues to be severe, providing strong support for gold as a risk-haven asset and extends its upwards momentum. We do not expect the situation to improve drastically in the short run, but we should take note of any news coming out from major countries regarding the vaccines.
Based on the factors above, we expect volatility to remain high for this week. The price of gold may penetrate the 1,900 key resistance level.
Fundamental analysis: strong uptrend and clear resistance level
From the 1-hour chart, the price rose from 1,843 to 1,889 last week before closing at 1,879.34 on Saturday. The most significant rise occurred on Wednesday amid strong fundamentals. We can notice that the current uptrend is supported by important data and fundamentals. On the 5-day/10-day moving averages, the biggest deviation occurred on Wednesday, and has basically retraced from that level afterwards for the remainder of the week.
Currently the K-line shows that the price is still in an uptrend, with clear upwards momentum. The MACD indicator is above the 0 level, with both lines crossing each other, which we expect to start another uptrend. However, we see 1,890 and 1,900 as strong resistance levels, so we expect the market to test the 1,890 level first. If this level is penetrated then it will likely reach the 1,900 key level.
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