XAU/USD Current price: $2,038.33
- Financial markets turned optimistic after US inflation eased further in November.
- Speculative interest increases bets of a shift in central banks' monetary policy.
- XAU/USD is in a bearish corrective decline in the near term, slide should remain limited.
Gold price is marginally lower on Thursday as investors rush away from safety following the release of United States (US) inflation figures. The Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favorite inflation gauge, was up 0.2% MoM and 3.5% YoY in October, meeting expectations while below September readings. Financial markets welcomed the headlines, seen as another confirmation the Fed will soon shift towards a rate-cut monetary policy.
Earlier in the day, the Eurozone reported the November Harmonized Index of Consumer Prices (HICP) at 2.4% YoY, according to preliminary estimates, down from 2.9% in October and below the expected 2.7%, while Germany's HICP published on Wednesday was also below forecast. All in one, price pressures among major economies continued to recede ahead of the year-end, boosting hopes central banks will not need additional rate hikes. Hence, the economies will dodge a steep economic downturn.
Demand for safety also affected government bonds, pushing yields up on the day. The 10-year Treasury note currently yields 4.32%, while the 2-year note offers 4.69%, far below the record peaks posted in October.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair shows it could enter a corrective decline after reaching a fresh multi-week high of $2,051.99. The bright metal posted a lower low and a lower high, aiming to end the day in the red. Still, it keeps developing well above all its moving averages, with the 20 Simple Moving Average (SMA) advancing above the longer ones at around $1,985. At the same time, technical indicators turned modestly lower within overbought readings, suggesting speculative interest may take some profits out of the table.
The 4-hour chart offers a similar picture. Technical indicators head lower, further below their recent peaks, although still within positive levels and with modest downward strength. XAU/USD bounced from a bullish 20 SMA, providing dynamic support at around the daily low of $2,031.01. Finally, the longer moving averages maintain their upward slopes far below the shorter one, suggesting additional declines could remain contained.
Support levels: 2,031.00 2,021.40 2,005.70
Resistance levels: 2,048.20 2,062.90 2,074.90
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