Market Analysis

Gold Hovers as Traders Await Fed Signals; XAU/USD Tests Key Support at $3,212

Dupoin · 20 May773.2K Views

XAU/USD

Prediction: Sideways

Gold is currently trading around $3,219 after rising sharply to $3,228.90 during the first session of the week. The short-term trend structure is still in a consolidation phase, with small technical corrections. On the H4 chart, the price is fluctuating around the EMA 200 ($3,222), below the EMA 34 and EMA 89, indicating weak upward pressure. However, the long-term uptrend has not been broken if the price maintains the $3,212 level.

FUNDAMENTAL ANALYSIS

Monetary Policy and Impact from the Fed:

The Fed has not introduced any new policies, but statements from officials like Bostic, Williams, and Kashkari today may clarify the upcoming direction.

Moody's recently downgraded the U.S. credit rating due to high budget deficits and rising borrowing costs, raising doubts about the ability to maintain high interest rates.

President Trump’s tax and spending package has been initially approved, which could increase fiscal pressure and indirectly support gold.

Inflation and Market Drivers:

CPI and PPI data will be the deciding factor for the short-term direction of gold prices. If the data exceeds expectations, the Fed may keep interest rates higher for longer, putting downward pressure on gold. Conversely, lower-than-expected data would reinforce expectations of easing.

Gold prices in May have risen 22.81% from the beginning of the year and are still considered a safe-haven asset.

Geopolitical and Market Sentiment:

Geopolitical instability remains unresolved: the U.S.-China tariff dispute has not been settled, and the 90-day ceasefire deadline will end in early August.

Risk-aversion demand remains, as hedge funds hold the lowest long positions of the year. This could limit gold's downside, even though short-term technical pressure still exists.

TECHNICAL ANALYSIS

Key Resistance Levels

$3,298: EMA 89 zone – short-term dynamic resistance
$3,380 – $3,440: GAP & Bear OB zone – strong resistance
$3,500: Historical peak – long-term hard resistance

Key Support Levels

$3,212: EMA 200 H4 – nearest support
$3,163 – $3,125: Demand zone, previously providing strong rebounds
$3,057: Further support if the $3,125 level is lost

Technical Indicators:

RSI is currently at 50.28, fluctuating around neutral. It previously exceeded the overbought zone (80.83) and is now in a correction phase. If RSI breaks below 50 along with a loss of EMA 200, it could trigger a deeper decline.

EMA: The price is currently below EMA 34 ($3,231) and EMA 89 ($3,256), but still above EMA 200 ($3,222), showing that the long-term trend has not broken. EMA 34 is showing signs of crossing below EMA 89 from above, signaling short-term weakness.

Volume: Volume is gradually decreasing within the sideways range, indicating a lack of momentum and a wait-and-see sentiment. Without any significant news, the price could continue to consolidate around $3,212 – $3,230.

Disclaimer

Derivative investments involve significant risks that may result in the loss of your invested capital. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

RISK WARNING IN TRADING

Transactions via margin involve leverage mechanisms, have high risks, and may not be suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be cautious of those who promise profits in trading. It's recommended not to use funds if you're not ready to incur losses. Before deciding to trade, make sure you understand the risks involved and also consider your experience.