Gold Price Forecast: XAU/USD bulls await sustained move beyond 200-DMA, NFP in focus
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Subscribe to Premium- Hawkish BoE and ECB prompted some intraday selling around gold on Thursday.
- Weaker USD, a steep fall in the US equity markets helped reverse the early slide.
- Investors look forward to the US monthly jobs report (NFP) for a fresh impetus.
Gold witnessed good two-way price moves on Thursday and finally settled with only modest losses, snapping three successive days of the winning streak. The intraday downtick was sponsored by a sharp rise in the global bond yields, which tends to drive flows away from the non-yielding yellow metal. Both the Bank of England and the European Central Bank adopted a more hawkish stance in an attempt to combat persistently high inflation. This comes after the Fed last week signalled an eventual liftoff in March, which, in turn, triggered a selloff in the bond markets.
In fact, the BoE hiked the benchmark interest rate by 25 bps, as was expected, while the vote distribution showed four MPC members backed an aggressive 50 bps increase in borrowing costs. Separately, the ECB President Christine Lagarde acknowledged mounting inflation risks and did not repeat previous guidance that an interest rate hike this year was extremely unlikely. The XAU/USD dropped below the $1,790 level after the BoE and the ECB announced their policy decisions, though a combination of factors helped limit losses and attracted fresh buying at lower levels.
The post-BoE/ECB rally in the European currencies weighed heavily on the US dollar and extended some support to the dollar-denominated commodity. Apart from this, a steep fall in the US equity markets benefitted the safe-haven precious metal and pushed spot prices back above the $1,800 mark. The commodity held steady above the mentioned handle through the Asian session on Friday and was last seen hovering near the top end of its weekly trading range. Market participants now look forward to the US monthly jobs report (NFP), due later during the early North American session for a fresh impetus.
The US economy is expected to have added 150K jobs in January, down from 199K reported in the previous month. The unemployment rate is foreseen to hold steady at 3.9% and Average Hourly Wages are anticipated to rise 0.5% MoM, 5.2% YoY during the reported month. Several labour market indicators, including the awful ADP report on Wednesday, have been suggesting trouble in the US labour market at the start of 2022. This, in turn, points to a considerable risk of a negative surprise, which should exert pressure on the already weaker USD and lift gold prices.
Technical outlook
From a technical perspective, the XAU/USD, so far, has struggled to capitalize on its recent bounce from a six-week low or find acceptance above the very important 200-day SMA. Hence, it will be prudent to wait for some follow-through buying beyond the weekly high, around the $1,810-$1,812 resistance zone, before positioning for any further gains. Gold could then aim to test the $1,830-$1,832 supply zone before extending the momentum towards the January monthly swing high, around the $1,854 region. The latter marks a downward-sloping trend-line extending from June 2021, which if cleared decisively will be seen as a fresh trigger for bullish traders and set the stage for additional gains.
On the flip side, any meaningful dip below the $1,800 mark might continue to find decent support near the $1,790 area ahead of the $1,782-$1,780 region. Failure to defend the mentioned support levels would make gold vulnerable to slide further towards the $1,768-67 horizontal support. The next relevant support is pegged near the $1,758 region and the $1,753-$1,752 zone, below which the downward trajectory could get extended towards the $1,724-23 area.
- Hawkish BoE and ECB prompted some intraday selling around gold on Thursday.
- Weaker USD, a steep fall in the US equity markets helped reverse the early slide.
- Investors look forward to the US monthly jobs report (NFP) for a fresh impetus.
Gold witnessed good two-way price moves on Thursday and finally settled with only modest losses, snapping three successive days of the winning streak. The intraday downtick was sponsored by a sharp rise in the global bond yields, which tends to drive flows away from the non-yielding yellow metal. Both the Bank of England and the European Central Bank adopted a more hawkish stance in an attempt to combat persistently high inflation. This comes after the Fed last week signalled an eventual liftoff in March, which, in turn, triggered a selloff in the bond markets.
In fact, the BoE hiked the benchmark interest rate by 25 bps, as was expected, while the vote distribution showed four MPC members backed an aggressive 50 bps increase in borrowing costs. Separately, the ECB President Christine Lagarde acknowledged mounting inflation risks and did not repeat previous guidance that an interest rate hike this year was extremely unlikely. The XAU/USD dropped below the $1,790 level after the BoE and the ECB announced their policy decisions, though a combination of factors helped limit losses and attracted fresh buying at lower levels.
The post-BoE/ECB rally in the European currencies weighed heavily on the US dollar and extended some support to the dollar-denominated commodity. Apart from this, a steep fall in the US equity markets benefitted the safe-haven precious metal and pushed spot prices back above the $1,800 mark. The commodity held steady above the mentioned handle through the Asian session on Friday and was last seen hovering near the top end of its weekly trading range. Market participants now look forward to the US monthly jobs report (NFP), due later during the early North American session for a fresh impetus.
The US economy is expected to have added 150K jobs in January, down from 199K reported in the previous month. The unemployment rate is foreseen to hold steady at 3.9% and Average Hourly Wages are anticipated to rise 0.5% MoM, 5.2% YoY during the reported month. Several labour market indicators, including the awful ADP report on Wednesday, have been suggesting trouble in the US labour market at the start of 2022. This, in turn, points to a considerable risk of a negative surprise, which should exert pressure on the already weaker USD and lift gold prices.
Technical outlook
From a technical perspective, the XAU/USD, so far, has struggled to capitalize on its recent bounce from a six-week low or find acceptance above the very important 200-day SMA. Hence, it will be prudent to wait for some follow-through buying beyond the weekly high, around the $1,810-$1,812 resistance zone, before positioning for any further gains. Gold could then aim to test the $1,830-$1,832 supply zone before extending the momentum towards the January monthly swing high, around the $1,854 region. The latter marks a downward-sloping trend-line extending from June 2021, which if cleared decisively will be seen as a fresh trigger for bullish traders and set the stage for additional gains.
On the flip side, any meaningful dip below the $1,800 mark might continue to find decent support near the $1,790 area ahead of the $1,782-$1,780 region. Failure to defend the mentioned support levels would make gold vulnerable to slide further towards the $1,768-67 horizontal support. The next relevant support is pegged near the $1,758 region and the $1,753-$1,752 zone, below which the downward trajectory could get extended towards the $1,724-23 area.
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