Gold Price Forecast: Consolidating losses and still aiming for lower lows

XAU/USD Current price:  $1,787.25

  • US Fed’s favorite inflation measure jumped to a 30-year high in October.
  • Government bond yields retreated from fresh weekly highs, but risk-off persists.
  • XAU/USD has room to extend its decline, despite oversold conditions in the near term.

Spot gold has spent the first half of the day consolidating losses just below the $1,790 figure, having extended its monthly decline by a few cents to $1,778.48 a troy ounce. The American dollar maintained its firm tone ahead of mixed US data, which also spurred risk-aversion, leaving XAU/USD range-bound due to increased demand for safety.

So far, the US announced core PCE inflation, which jumped to 4.1% YoY in October, its highest in 30 years, and Initial Jobless Claims for the week ended November 19, which contracted to 199K, the lowest reading since the pandemic began. Also, Q3 Gross Domestic Product was upwardly revised to 2.1%, missing the expected 2.2%, while the Michigan Consumer Sentiment Index was confirmed at 67.4 in November, better than previously estimated. Overall, US data reinforced the case for a tighter monetary policy, despite policymakers’ reluctance.  

Demand for the greenback paused ahead of the release of the November FOMC Meeting Minutes, to be out ahead of Wall Street’s close. Meanwhile, US Treasury yields retreated from intra-day highs, with the yield on the 10-year note currently around 1.64% after hitting an intraday high of 1.693%. It is worth noting that the dollar soared in March when such a yield surged past 1.70%, now a line in the sand.

Gold price short-term technical outlook

The XAU/USD pair is flat for the day, although still bearish.  The daily chart shows that the Momentum indicator is heading firmly lower, crossing its midline into negative territory. The RSI, in the meantime, is stable around 42, while sellers remain aligned around converging and directionless 100- and 200-SMAs.

In the near term, and according to the 4-hour chart, bears are still in control, as the bright metal is barely correcting extreme oversold conditions. Gold remains below all of its moving averages, with the 20-SMA heading firmly lower between the longer ones, reflecting sellers’ strength. Technical indicators have bounced modestly from their recent lows but remain within oversold levels. Additionally, Gold is developing below the 61.8% retracement of its November rally at 1,803.85, the level to overcome for the metal to shrug off the negative stance.

Support levels: 1,771.95 1,758.80 1,745.20

Resistance levels: 1,796.00 1,803.85 1,817.75  

View Live Chart for the XAU/USD

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