Gold Price Forecast: XAU/USD consolidates above $2,020 as inflation gauges loom

Valeria Bednarik FXStreet

XAU/USD Current price: 2,022.49

Canada, the United Kingdom and the United States will release inflation updates this week.
US Treasury yields remain near recent multi-week lows, undermining demand for the US Dollar.
XAU/USD is technically neutral, as investors remain away from safe-haven assets.

Gold prices trade with a soft tone, although XAU/USD stands a few bucks above Friday’s close at $2,018.19 a troy ounce. Demand for the US Dollar remained subdued amid softer government bond yields following the latest Federal Reserve (Fed) monetary policy decision. The central bank pretty much confirmed the end of monetary tightening by holding fire for a third consecutive meeting while beginning to pivot towards rate cuts.

As a result, US Treasury yields retreated sharply, with the 10-year note offering as low as 3.92% after a record peak of 4.99% in October. At the time being, the yield on the 10-year bond stands at 3.95%, adding barely 2 basis points (bps) on the day, hardly enough to underpin the US Dollar.

Meanwhile, Wall Street shrugged off the sour tone of its overseas counterparts, and the three major indexes trade in the green, further limiting demand for the safe-haven Greenback. The ruling optimism, however, also undermines demand for the bright metal, maintaining XAU/USD in a tight range.

As financial markets head into winter holidays, some relevant data remains to watch out for. Throughout the upcoming days, the United Kingdom and Canada will release inflation updates, while the Bank of Japan (BoJ) will announce its decision on monetary policy. Finally on Friday, the United States (US) will publish the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge. The PCE Price Index is expected to have increased by 3.3% YoY in November, down from 3.5% in the previous month.

XAU/USD short-term technical outlook

The daily chart for XAU/USD offers a neutral-to-bullish stance. The pair trades just above a bullish 20 Simple Moving Average (SMA), which advances well above the longer ones. Technical indicators, on the contrary, turned marginally lower within neutral levels, reflecting the absence of buying interest.

Gold is neutral in the 4-hour chart. XAU/USD is stuck around its 20 and 100 SMAs, with the shorter one advancing but the longer one holding pat. The Momentum indicator heads south below its 100 line, while the Relative Strength Index (RSI) indicator rotated lower, currently standing at around 52, not enough to confirm a leg lower.

Support levels: 2,014.10 2,003.90 1,991.45

Resistance levels: 2,035.40 2,047.90 2,065.60

View Live Chart for XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD eyes 0.7000 as USD remains on the back foot amid softer bond yields

AUD/USD fills a modest bearish gap on Monday, approaching 0.7000 during the Asian session amid holiday-thinned liquidity. The US Dollar remains on the back foot as US bond yields pull back from multi-year highs, supporting the pair. However, the Fed's hawkish outlook and the US-Iran standoff should limit USD losses. Moreover, diminishing odds of another RBA rate hike in November might cap the Aussie.

USD/JPY remains confined in a familiar range around 158.00

USD/JPY extends its range-bound price action at the start of a new week, trading around 158.00 as bulls remain on high alert amid speculation that authorities would step in to prop up the Japanese Yen. Furthermore, softer US bond yields keep US Dollar bulls on the back foot and cap the currency pair. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold advances to over one-week top, above $4,200 on softer bond yields/USD

Gold moves above $4,200 on Monday, hitting an over one-week high during the Asian session as softer US bond yields keep US Dollar bulls on the defensive. However, the US-Iran standoff over the Strait of Hormuz, along with a hawkish Fed, could limit USD losses. This could cap non-yielding bullion as traders look to US inflation figures and Fed Chair Kevin Warsh's speech for a fresh impetus during the latter part of this week.

Week ahead: US CPI, France’s budget crisis and Q3 earnings to set the market tone

The US dollar held relatively strong this week, despite the disappointing US jobs report on October 2, which further decreased the probability of a back-to-back rate hike by the Fed at the upcoming gathering on October 28.

Middle East War updates: New attack launched on Saudi airport

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week. In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?