XAU/USD Current price: $1,773.14
- The Omicron coronavirus variant may reduce the effectiveness of vaccines and treatments.
- US Federal Reserve Chair Powell talked about speeding up tapering.
- XAU/USD faltered again around the 1,800 level, may retest November low.
Spot gold surged past $1,800 a troy ounce and hit 1,808.79 early in the American session, as investors moved away from the greenback. Market participants were looking at the latest coronavirus developments and the so-called Omicron strain. US Treasury yields plunged, dragging alongside the American currency. The dismal mood was caused by preliminary estimates that the current vaccines and antibody drugs’ cocktails would likely be less effective against the new COVID-19 variant.
The dollar changed course following comments from US Federal Reserve Chair Jerome Powell. Testifying on the CARES act before the Senate Banking Committee, Powell said that it is time to retire the term "transitory" for inflation. Additionally, he considers it is appropriate to talk about speeding up tapering in the upcoming December meeting. His words sent Wall Street sharply lower, bond yields recovered and the dollar soared.
Gold price short-term technical outlook
XAU/USD fell at 1,771.81, its lowest since November 4, trading a few bucks above the level at the time of writing. The daily chart shows that the bright metal briefly advanced beyond a Fibonacci resistance level at 1,803.85, but once again was unable to sustain gains beyond it. It is currently trading below all of its moving averages, which anyway remain directionless, while technical indicators head south within negative levels.
The 4-hour chart shows that technical indicators head lower almost vertically, as the metal develops below all of its moving averages. A mildly bullish 200 SMA provided intraday resistance just above the mentioned Fibonacci level. Overall, the bright metal is set to retest the November low at 1,758.81, while a break below should lead to a continued decline towards the 1,700 price zone.
Support levels: 1,771.80 1,758.80 1,745.20
Resistance levels: 1,787.50 1,796.00 1,803.85
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