Gold Price Forecast: XAU/USD consolidates above $2,020 as inflation gauges loom
|XAU/USD Current price: 2,022.49
- Canada, the United Kingdom and the United States will release inflation updates this week.
- US Treasury yields remain near recent multi-week lows, undermining demand for the US Dollar.
- XAU/USD is technically neutral, as investors remain away from safe-haven assets.
Gold prices trade with a soft tone, although XAU/USD stands a few bucks above Friday’s close at $2,018.19 a troy ounce. Demand for the US Dollar remained subdued amid softer government bond yields following the latest Federal Reserve (Fed) monetary policy decision. The central bank pretty much confirmed the end of monetary tightening by holding fire for a third consecutive meeting while beginning to pivot towards rate cuts.
As a result, US Treasury yields retreated sharply, with the 10-year note offering as low as 3.92% after a record peak of 4.99% in October. At the time being, the yield on the 10-year bond stands at 3.95%, adding barely 2 basis points (bps) on the day, hardly enough to underpin the US Dollar.
Meanwhile, Wall Street shrugged off the sour tone of its overseas counterparts, and the three major indexes trade in the green, further limiting demand for the safe-haven Greenback. The ruling optimism, however, also undermines demand for the bright metal, maintaining XAU/USD in a tight range.
As financial markets head into winter holidays, some relevant data remains to watch out for. Throughout the upcoming days, the United Kingdom and Canada will release inflation updates, while the Bank of Japan (BoJ) will announce its decision on monetary policy. Finally on Friday, the United States (US) will publish the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge. The PCE Price Index is expected to have increased by 3.3% YoY in November, down from 3.5% in the previous month.
XAU/USD short-term technical outlook
The daily chart for XAU/USD offers a neutral-to-bullish stance. The pair trades just above a bullish 20 Simple Moving Average (SMA), which advances well above the longer ones. Technical indicators, on the contrary, turned marginally lower within neutral levels, reflecting the absence of buying interest.
Gold is neutral in the 4-hour chart. XAU/USD is stuck around its 20 and 100 SMAs, with the shorter one advancing but the longer one holding pat. The Momentum indicator heads south below its 100 line, while the Relative Strength Index (RSI) indicator rotated lower, currently standing at around 52, not enough to confirm a leg lower.
Support levels: 2,014.10 2,003.90 1,991.45
Resistance levels: 2,035.40 2,047.90 2,065.60
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