Gold price analysis for May

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Apr 29, 2021
  • The price of this precious metal still remains under pressure
  • Rising inflation worries could help Gold to advance
  • $1800 represents a very strong resistance level

Gold has advanced from $1705 above $1790 since the beginning of April, and the current price stands around $1768. The price of this precious metal still remains under pressure, but rising inflation worries could help Gold to advance again above $1800 resistance.

Fundamental analysis: Rising inflation worries could help Gold to advance

Gold price continues to trade below $1800 resistance, but the U.S. policymakers said they expect a rise in inflation which is positive for the price of this precious metal. The U.S. economy grew by more than anticipated in the first quarter, but the U.S. Central Bank left its monetary policy unchanged this week.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Despite the risk of inflation, the Federal Reserve will focus on ensuring that the labor market makes a full recovery and the stimulus program would remain in place until the economy recovers to levels before the pandemic.

“We’re still probably a couple of years away from pre-pandemic employment levels, but based on the powerful economic momentum built up in the first quarter, we should return close to a fully-functioning economy in the second quarter,” said Robert Frick, corporate economist at Navy Federal Credit Union.

Risk aversion will likely prevail in the upcoming days, while the weakness in the U.S. dollar and lower U.S. Treasury yields could also help this precious metal to stabilize above $1800 resistance. Concerns over the pace of vaccination campaigns in many parts of the world still represent an issue; shops, cafes, restaurants are closed in many countries, and the global battle against the coronavirus continues.

Gold is considered a safe-haven asset, and the price of Gold should advance if the situation with pandemic gets worse as investors look for safer places to invest their money. Investors will continue to pay attention to the bank’s commentary looking for any clues, but the gold price may also benefit from the correction of the stock market (if it happens).

The high and rising levels of U.S. debt currently at record levels have the potential to force the Federal Reserve to print even more money. The threat of massive inflation exists, and according to fundamental analysis, the Gold price could accelerate to the upside this May.

Technical analysis: $1800 represents a very strong resistance level

The price of Gold has weakened from its highs in January, while the $1700 and $1800 levels have acted as support and resistance last two months.

Data source: tradingview.com

If the price falls below $1700, it would be a firm “sell” signal, and we have the open way to $1650. On the other side, if the price jumps above $1800, it would be a signal to trade Gold, and we have the open way to $1850 or even $1900.

Summary

The price of this precious metal still remains under pressure, but rising inflation worries could help Gold to advance again above $1800 resistance. Risk aversion will likely prevail in the upcoming weeks, and if the price jumps above the $1800 resistance level, the next target could be around $1850.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
  2. Capital.com, simple, easy to use and regulated. Register here >