Gold Price Forecast: XAU/USD rebounds ahead of US PCE inflation, not out of the woods yet
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UNLOCK OFFER- Gold price attempts a bounce as the US dollar retreats ahead of US PCE inflation.
- Stronger US GDP, Fed’s hawkishness keep the Treasury yields elevated.
- Thursday’s close below 100-DMA points to more downside in the making.
After Wednesday’s $40 sell-off, gold price tumbled another $23 on Thursday, as bulls finally surrendered the $1,800 area to hit the lowest level in two weeks at $1,792. The blow from Wednesday’s US Federal Reserve’s (Fed) hawkish confirmation got intensified after America’s economy expanded by 6.9% in Q4 2021 on an annualized basis when compared to the market consensus of a 5.5% growth. The US dollar’s rally found extra legs, as the Treasury yields also climbed further on faster Fed’s rate hike prospects and a likely balance-sheet reduction. Escalating concerns over aggressive Fed’s tightening to tame inflation kept the Wall Street indices on the back foot, adding to the greenback’s haven demand at gold’s expense.
The calm on the Russia-Ukraine crisis, as the US and NATO attempt to ease the diplomatic tensions, provided additional headwinds to gold price. On Wednesday, US Secretary of State Antony Blinken warned of "steep consequences" facing Russia should President Vladimir Putin refuse to de-escalate. France hosted its own diplomatic meeting with representatives from Germany, Russia and Ukraine.
Ahead of the critical US PCE inflation release, gold price is making a minor recovery attempt from the near strong support of $1,795. The dollar eases from multi-month peaks, despite the firmer yields, aiding the rebound in gold. Easing Ukraine geopolitical tensions and receding Fed rate hike concerns offer a sigh of relief to investors, as they gear up for the top-tier US macro data. The US Core Personal Consumption Expenditures (PCE) - Price Index for December is seen a tad higher at 4.8% YoY vs. 4.7% previous. The personal spending and UoM Consumer Sentiment data will be also closely followed wrapping up an eventful week. The bright metal is set for the biggest weekly decline in ten, eyeing a $35 loss over the week.
Gold Price Chart - Technical outlook
Gold: Daily chart
Following rejection at the upper boundary of a month-long rising wedge formation at $1,853 earlier this week, a sell-off ensued that smashed gold price below the $1,800 threshold.
The latest downslide in gold confirmed the bullish wedge while Thursday’s closing below the horizontal 100-Daily Moving Average (DMA) at $1,795 provide the extra zest to XAU sellers.
Any retracement in gold price from lower levels will face initial hurdle at the bearish 50-DMA of $1,802, above which the flattish 200-DMA at $1,806 will come into the picture.
Recapturing the 21-DMA at $1,818 is critical to negating the bearish momentum in the near-term.
With the 14-Relative Strength Index (RSI), however, still below the midline, the downside bias appears well in place.
The next significant target for gold bears is seen at $1,783, the January lows. A firm break below the latter will accelerate the sell-off towards $1,750.
- Gold price attempts a bounce as the US dollar retreats ahead of US PCE inflation.
- Stronger US GDP, Fed’s hawkishness keep the Treasury yields elevated.
- Thursday’s close below 100-DMA points to more downside in the making.
After Wednesday’s $40 sell-off, gold price tumbled another $23 on Thursday, as bulls finally surrendered the $1,800 area to hit the lowest level in two weeks at $1,792. The blow from Wednesday’s US Federal Reserve’s (Fed) hawkish confirmation got intensified after America’s economy expanded by 6.9% in Q4 2021 on an annualized basis when compared to the market consensus of a 5.5% growth. The US dollar’s rally found extra legs, as the Treasury yields also climbed further on faster Fed’s rate hike prospects and a likely balance-sheet reduction. Escalating concerns over aggressive Fed’s tightening to tame inflation kept the Wall Street indices on the back foot, adding to the greenback’s haven demand at gold’s expense.
The calm on the Russia-Ukraine crisis, as the US and NATO attempt to ease the diplomatic tensions, provided additional headwinds to gold price. On Wednesday, US Secretary of State Antony Blinken warned of "steep consequences" facing Russia should President Vladimir Putin refuse to de-escalate. France hosted its own diplomatic meeting with representatives from Germany, Russia and Ukraine.
Ahead of the critical US PCE inflation release, gold price is making a minor recovery attempt from the near strong support of $1,795. The dollar eases from multi-month peaks, despite the firmer yields, aiding the rebound in gold. Easing Ukraine geopolitical tensions and receding Fed rate hike concerns offer a sigh of relief to investors, as they gear up for the top-tier US macro data. The US Core Personal Consumption Expenditures (PCE) - Price Index for December is seen a tad higher at 4.8% YoY vs. 4.7% previous. The personal spending and UoM Consumer Sentiment data will be also closely followed wrapping up an eventful week. The bright metal is set for the biggest weekly decline in ten, eyeing a $35 loss over the week.
Gold Price Chart - Technical outlook
Gold: Daily chart
Following rejection at the upper boundary of a month-long rising wedge formation at $1,853 earlier this week, a sell-off ensued that smashed gold price below the $1,800 threshold.
The latest downslide in gold confirmed the bullish wedge while Thursday’s closing below the horizontal 100-Daily Moving Average (DMA) at $1,795 provide the extra zest to XAU sellers.
Any retracement in gold price from lower levels will face initial hurdle at the bearish 50-DMA of $1,802, above which the flattish 200-DMA at $1,806 will come into the picture.
Recapturing the 21-DMA at $1,818 is critical to negating the bearish momentum in the near-term.
With the 14-Relative Strength Index (RSI), however, still below the midline, the downside bias appears well in place.
The next significant target for gold bears is seen at $1,783, the January lows. A firm break below the latter will accelerate the sell-off towards $1,750.
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