Gold Price Forecast: Bulls take the lead despite mounting risk-aversion

XAU/USD Current price: $1,782.65

• Russian President Vladimir Putin said the risk of a nuclear war is increasing.
• Stock markets turned south amid risk-related headlines, Wall Street trimmed early gains.
• XAU/USD is technically neutral in the near term, buyers defend the $1,760 region.

Spot gold surged with Wall Street’s opening and hit an intraday high of $1,787.79 a troy ounce, as the positive tone of US indexes undermined demand for the US Dollar. Optimism was short-lived, as Russian President Vladimir Putin said that the threat of a nuclear war is on the rise, suggesting they would use them as a response to an attack on its region or allies. Stock markets trimmed gains and turned red, while European indexes fell further after spending the day below their opening levels.

The US Dollar managed to recover some ground, but it keeps trading in the red against most of its major rivals. XAU/USD trades around $1,782 at the time being.

Market participants were again paying attention to the US Treasury yields curve. Recession-related concerns and uncertainty about what the US Federal Reserve will do next week in its last meeting of the year pushed the curve to the widest inversion in over forty years. The yield on the 10-year note peaked at 3.559%, while that on the 2-year note hit 4.381%. Yields gave up ahead of the US opening and currently stand at fresh multi-week lows. The 10-year Treasury note currently yields 3.46% after bottoming for the day at 3.408%.

XAU/USD price short-term technical outlook

From a technical point of view, the XAU/USD pair has its bullish potential intact. In the daily chart, the bright metal keeps meeting buyers ahead of a bullish 20 SMA, which extends its advance above a mildly bullish 100 SMA. The 200 SMA, is neutral-to-bearish above the current level, providing dynamic resistance at around $1,793.50. The Momentum indicator, in the meantime, bounced from around its midline, lacking follow-through, while the RSI indicator stands pat at around 60.

In the near term, and according to the 4-hour chart, XAU/USD is neutral. It is currently seesawing around a mildly bearish 20 SMA, while the longer moving averages remain far below the current level. Technical indicators lack directional strength, the RSI within neutral levels, while the Momentum remains below its midline.

Support levels: 1,762.70 1,749.10 1,738.25

Resistance levels: 1,778.45 1,794.35 1,807.30

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