Gold Price Forecast: XAU/USD heading towards $2,000
|XAU/USD Current price: $1,980.67
- Mixed earnings reports affect the market sentiment ahead of first-tier events.
- The US Dollar stands on the back foot despite an uptick in Treasury yields.
- XAU/USD quickly regained the upside on an intraday dip, bulls retain control.
XAU/USD advances on Wednesday, changing hands at around $1,982 a troy ounce. Financial markets are watching Wall Street’s earnings reports while assessing the economic outlooks ahead of Thursday’s first-tier events.
On the one hand, financial markets anticipate the United States (US) economy has grown substantially between July and September, at an annualized pace of 4.2%, according to the market forecast. Such an upbeat figure should spook the ghost of higher rates, yet at the same time, it would probably mean the Federal Reserve (Fed) will maintain rates higher for longer, as Chair Jerome Powell has said that the central bank needs below-trend growth for inflation to return to the 2% target.
On the other hand, the European Central Bank (ECB) will also announce its decision on monetary policy on Thursday. Christine Lagarde and co are widely anticipated to keep rates on hold and take a cautious approach to future monetary policy.
Meanwhile, earnings season affects the sentiment. The Nasdaq Composite is sharply down after mixed figures from big tech names. The S&P500 also trades in the red, while the Dow Jones Industrial Average posts modest intraday gains. Finally, government bond yields are up, with the 10-year Treasury note adding 7 basis points (bps) to hover at 4.91%.
XAU/USD short-term technical outlook
Technical readings in the daily chart for XAU/USD favors another leg north, although the pair still trades below the monthly peak at $1,997.17. The pair trades well above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction below the longer ones. At the same time, technical indicators resumed their advances within overbought readings with uneven strength.
XAU/USD is neutral-to-bullish according to the 4-hour chart. The bright metal holds above a flat 20 SMA, while the 100 SMA keeps advancing far below the current level. Finally, technical indicators remain above their midlines but are turning south. Bulls will gain confidence on a break above the aforementioned October high.
Support levels: 1,964.30 1,953.30 1,936.60
Resistance levels: 1,997.20 2,008.10 2,011.95
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