Fundamental view:

Gold has rallied significantly during the last week and reached towards the $1800 level. Because of the absence of the significant macroeconomic data releases and fundamental developments, the risk-positive market environment posted a barrier for the dollar to find demand at the start of the week. On the next day Tuesday, the benchmark 10-year US Treasury bond yield lost nearly 1% and made the greenback to continue to lose interest. Meanwhile The FOMC’s publication revealed that a couple of Fed policymakers raised risks of inflation building to unwanted levels before providing sufficient evidence to induce a policy reaction. 

On Friday, the data from the US showed that the economic activity in the private sector continued to expand at a robust pace in May with the IHS Markit’s Manufacturing and Services PMIs reaching new series highs. This publication highlighted a increase in input prices and assisted the greenback at the last day  and it also limited the yellow metal’s upside.

The major economic events deciding the movement of the pair in the next week are Fed Governor Brainard Speech at May 24, CB Consumer Confidence Index at May 25, EIA Crude Oil Stocks Change at May 26, GDP quarterly report, Core Durable Goods Orders monthly report at May 27 and Michigan Consumer Sentiment at May 28 for US. 

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 2.35% higher than the previous week. Maintaining high at 1890.1 and low at 1852.1 showed a movement of 380 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1897.0 may open a clean path towards 1912.5 and may take a way up to 1935.0. Should 1859.0 prove to be unreliable support, the XAUUSD may sink downwards 1836.5 and 1821.0 respectively. In H4 chart diamond pattern breakout favors prospects of a bullish trend. Also to be noted Bullish engulfing formation exerts the expectation of uptrend for the pair.