Gold Price Forecast: XAU/USD bears await a break below ascending trend-line support
|- Some USD profit-taking assisted gold to gain some positive traction on Thursday.
- Hawkish Fed expectations kept a lid on any meaningful gains for the commodity.
- Weakness below an ascending trend-line is needed to confirm a fresh breakdown.
- Gold Price Forecast: Thanksgiving Day unlikely to offer respite to XAU/USD bulls amid a bear flag
Gold gained some positive traction on Thursday, albeit lacked any follow-through and remained well within the striking distance of a three-week low touched in the previous day. The US dollar witnessed some profit-taking following the recent strong runup to the highest level since July 2020. This, in turn, was seen as a key factor that extended some support to the dollar-denominated commodity. Apart from this, concerns about the economic fallout from the rising number of COVID-19 cases and the imposition of fresh lockdown measures in Europe further underpinned the safe-haven gold. That said, stable performance in the equity markets, along with hawkish Fed expectations kept a lid on any further gains for the non-yielding yellow metal.
The markets seem convinced that the Fed would be forced to tighten its monetary policy sooner rather than later to contain stubbornly high inflation. The bets were reinforced by Wednesday's release of the US PCE Price Index, which accelerated to a 30-year high in October. Adding to this, the minutes of the November FOMC meeting revealed that were open to speeding up the tapering of the bond-buying program and moving quickly to raise interest rates if high inflation persists. The Fed funds futures indicate the possibility for an eventual rate hike move by mid-2022 and a high likelihood of another raise in November. This warrants some caution for bullish traders and before confirming that gold prices might have bottomed out in the near term.
The fundamental backdrop remains tilted firmly in favour of bears, though relatively thin liquidity conditions on the back of the Thanksgiving holiday in the US held back traders from placing fresh bets. Even from a technical perspective, gold, so far, has managed to defend a short-term ascending trend-line support extending from the September monthly swing low, around the $1,722 area. This further makes it prudent to wait for a convincing break below the mentioned support before positioning for any further depreciating move.
Gold daily chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.