XAU/USD Outlook: Gold Eyes $2000 Barrier as Bulls Accelerate in May on Growing Inflationary Pressure

Technical analysis of Forex market

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.