Gold Price Forecast: XAU/USD extends its consolidative phase near monthly highs

XAU/USD Current price: $1,981.35

• The Bank of England kept benchmark rates on hold as anticipated.
• Investors will now focus on the October US Nonfarm Payrolls report.
• XAU/USD consolidates around $1,980 as a better mood limits safe-haven demand

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Gold trades with a softer tone amid a better market mood, with XAU/USD currently at around $1,981 a troy ounce. The improved sentiment also limits US Dollar demand, leaving the pair ranging within familiar levels.

Following the Federal Reserve (Fed) monetary policy decision on Wednesday, market players moved into high-yielding assets as the central bank held rates steady for a second consecutive meeting, somehow suggesting the tightening cycle is over. Chairman Jerome Powell was wary of confirming it, but after the dust settled, the odds for another rate hike in December or January were sharply down.

Early on Thursday, the Bank of England (BoE) decided to leave the policy rate unchanged at 5.25%, as expected, with the Monetary Policy Committee (MPC) voting 6-3 in favor of the decision. Like their overseas counterparts, British policymakers noted that the risk to inflation are still skewed to the upside while noting that rates should remain “higher for longer” to achieve their goal.

Wall Street extends its post-Fed rally, with the three major indexes trading well in the green. Meanwhile, the yield on the 10-year Treasury note continues to retreat, currently yielding 4.66%, down 12 basis points (bps) in the day. The 2-year note offers  4.99%, up 2 bps.

The busy data week is not over. On Friday, the United States (US) will release the November Nonfarm Payrolls report. The country is expected to have added 180K new jobs in the month, while the Unemployment Rate is expected to have held steady at 3.8%. The country will also publish the October Services PMI, foreseen at 53 from 53.6 in the previous month.

XAU/USD short-term technical outlook

XAU/USD is little changed for a second consecutive day, not far from its recent peak at $2,006.71. Technical readings in the daily chart suggest the slide is corrective, with the bearish potential is still seen limited. In the mentioned time frame, Gold develops above all its moving averages, and with the 20 Simple Moving Average (SMA) heading north above the longer ones. The Momentum indicator aims south almost vertically but holds above its 100 line, while the Relative Strength Index (RSI) indicator consolidates around 63.

Gold could extend its slump in the near term but would need to pierce the weekly low at $1,696.80. Sellers are aligned at around a mildly bearish 20 SMA in the 4-hour chart, providing dynamic resistance at around $1,989.00. The longer moving averages remain below the current level, with the 100 SMA heading firmly higher. Technical indicators, in the meantime, maintain their bearish slopes within negative levels, reflecting the absence of buying interest rather than suggesting increased selling interest.

Support levels: 1,969.80 1,956.60 1,945.20

Resistance levels: 1,989.00 2,006.70 2,018.40

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