XAU/USD Current price: $1,808.34
- US President Joe Biden nominated Jerome Powell for a second term as Fed’s head.
- The dollar rallies on the heels of speculation of two rate hikes in the US in 2022.
- XAU/USD approaches the 61.8% retracement of its November rally.
Gold plunged below $1,810.00 a troy ounce heading into the US session, now trading a few cents above its intraday low. The greenback started the week with a firm footing, breaking higher on news indicating that US President Joe Biden nominated Jerome Powell for a second term as chair of the US Federal Reserve. Lael Brainard, who reportedly was the other top candidate for the position, will become the new vice-chair.
The news also lifted government bond yields, which were already up, with that on the 10-year US Treasury note currently at 1.60%. At the same time, Wall Street managed to shrug off the sour tone of their overseas counterparts, with most US indexes trading in the green. Gold gave up to the dollar’s demand, with the latter also backed by speculation that the US Federal Reserve may hike rates next year.
The week will be a short one, as the US celebrates Thanksgiving on Thursday, which means all markets will be closed. Stocks and bond markets will be back on Friday but will close early. The country will have a busy Wednesday, as it will release multiple reports which include updated inflation figures.
Gold price short-term technical outlook
XAU/USD has fallen for three days in a row, now standing below the 50% retracement of its November rally at $1,817.75, the immediate resistance level. The daily chart suggests that the slide may extend in the upcoming sessions as technical indicators head firmly lower, retreating from overbought readings and with the RSI already within negative levels. The precious metal is also developing below a now flat 20-SMA, while the 100-and 200-SMAs converge around $1,792. The immediate support level is the 61.8% retracement of the same rally at $1,803.70.
The 4-hour chart shows that technical indicators stand within extreme oversold levels, but still heading lower, without signs of bearish exhaustion. Additionally, the pair is developing below its 20- and 100-SMA, while the 200-SMA converges with the mentioned Fibonacci support, reinforcing the level.
Support levels: 1,803.70 1,792.00 1,784.90
Resistance levels: 1,817.75 1,826.40 1,834.00
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