Gold Price Forecast: Is the Santa rally shaping up for XAU/USD?

Gold rebounds firmly from 100-DMA support as the US dollar wilts.
Ebbing Omicron fears fuel a much-awaited Santa rally in global markets.
Gold looks to retest December highs amid bullish technical setup.

Dhwani Mehta FXStreet

Gold rebounded firmly from near three-day lows and jumped about $20, in an eagerly-anticipated Santa rally, which eventually materialized after scientific studies worldwide revealed that the effect of the Omicron covid variant is less severe. Wall Street took the encouraging news in its stride, downing the US dollar across the board while rescuing gold bulls. Upbeat US GDP and Consumer Confidence data added to the market’s optimism. The sharp pullback in the US Treasury yields also helped gold price stage an impressive bounce. Amidst the renewed upside, gold price recaptured the $1,800 threshold and finished Wednesday near multi-day tops at $1,805.

So far this Thursday, gold is trying to build on Wednesday’s turnaround as bulls take a breather amid the risk-on market mood. Investors have turned cheerful as the realisation that the Omicron covid strain is milder limits fears its will hamper the global economic recovery. The US dollar is nursing losses while Treasury yields stabilize ahead of the US Durable Goods and PCE inflation data, which will be the last set of top-tier macro ahead of the Christmas holiday season. Thin volumes and Omicron updates will continue to impact risk trends, as well as gold price action.

Gold Price Chart - Technical outlook

Gold: Daily chart

Wednesday’s sharp gains have helped gold price recapture all the major Daily Moving Averages (DMA), underpinning the bullish sentiment.

The 14-day Relative Strength Index (RSI) is trading firmer above the midline, pointing to more upside in the making.

Bulls could retest the daily highs at $1,809, above which a fresh advance will kick in towards the December highs of $1,814.

The next critical target for bulls is seen at the $1,820 round number.

Alternatively, the 50-DMA at $1,800 is the immediate line of defense for gold buyers, below which hopes are stacked up at the 200-DMA of $1,796.

If the sellers remain in complete control, then additional downside could open up towards the 100-DMA at $1,788, which is a line in the sand for gold optimists.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.