Gold Price Forecast: XAU/USD buyers return with safe-haven flows, eyes weekly gain

Gold is back in the green, re-attempting the $4,200 mark early Friday, partly reversing Thursday’s pullback from three-week highs of $4,245.   

Gold looks north amid ongoing USD declines

In doing so, Gold remains on track for a strong weekly advance even as markets scale back bets for a US Federal Reserve (Fed) interest rate cut in December.

The latest slew of speeches from Fed officials has been relatively hawkish or prudent, prompting markets to now price in a roughly 51% chance of a Dec Fed rate cut, the CME Group’s FedWatch Tool shows, down from 63% seen a day ago.

St. Louis Fed President Alberto Musalem noted on Thursday that there was limited room to ease further without becoming overly accommodative, while Cleveland Fed President Beth Hammack said interest rate policy should remain restrictive to put downward pressure on inflation, per Reuters.

Minneapolis Fed President Neel Kashkari said that “Inflation is still too high, at 3%,” warranting caution on further easing.

Following these commentaries, the yields on the US Treasury bonds spiked, dragging Gold price southward.

Further, traders also resorted to cashing out on their Gold longs after four straight days of gains, anticipating any clarity on the US economic data releases after the record government shutdown ended.

In Friday’s trading so far, Gold is drawing support from the return of safe-haven flows amid the global market sell-off, while sustained US Dollar (USD) weakness also floats the boat for the bright metal.

Uncertainty over the September jobs report, combined with a likelihood of no employment and inflation data for October, stokes concerns about the health of the economy and on the Fed’s next move.

These unknowns seem to be powering the latest leg north in the traditional store of value, Gold.

Heading into the weekend, a lack of official data releases will put the focus back on the Fedspeak. Gold could see some profit-taking once again as the end-of-the-week flows will likely remain in play.

Gold price technical analysis: Four-hour chart

As observed on the four-hour chart, Gold buyers seem hopeful while above the 21-Simple Moving Average (SMA) at $4,161.

The Relative Strength Index (RSI) is positioned comfortably above the midline, currently near 63.50, suggesting that the bullish potential remains intact for the bright metal.

The 50-SMA and 200-SMA Golden Cross adds credence to persisting bullish sentiment around Gold.

Buyers are once again looking for acceptance above the $4,192 level, the 61.8% Fibonacci Retracement level of October’s 11% correction to $3,386.

The next topside target is seen at the previous day’s high of $4,245, above which the 78.6% Fibo resistance at $4,275 will be tested.

Further up, the $4,300 round figure could act as a tough nut to crack for buyers.

On the flip side, a failure to defend the 21-SMA at $4,160 on any pullbacks could put the 50% Fibo support of $4,133 at risk.

Subsequently, a fresh decline cannot be ruled out toward the $4,070 demand area, which is the confluence of the 38.2% Fibo level, 50- and 200-SMAs.