Gold Price Forecast: XAU/USD recaptures 200DMA on a weekly basis, what’s next?

• Gold price resumes the uptrend and hits five-month highs beyond the $1,800 mark.
• United States Dollar dumping extends as China reopening expands.  
• Gold price closes the week above the 200-Daily Moving Average, eyes $1,814 next.

Gold price is regaining the upside traction above the $1,800 threshold after the down day on Friday, as bulls fight back control at the start of a new week. The United States Dollar (USD) continues to feel the pull of gravity amid the return of risk flows while awaiting the US ISM Services PMI.

United States ISM Services PMI in focus  

The United States Dollar is hitting fresh six-month lows near 104.00 against its major rivals, having closed the bullish opening gap, as the sell-off resumes and lifts the Gold price sharply higher ahead of the critical US ISM Manufacturing PMI data. The headline ISM Services PMI from the United States is seen higher at 55.6 vs. 54.4 previous while the New Orders and Prices Paid sub-components are also expected to rise in November. Investors remain doubtful whether the upbeat US ISM Services data would help pause the US Dollar sell-off, as the solid Nonfarm Payrolls data on Friday failed to offer any sustained respite to USD bulls.

United States Nonfarm payrolls: A big beat

The United States Bureau of Labor Statistics (BLS) showed Friday that the Nonfarm Payrolls increased by 263,000 in November vs. the 200,000 expected while the Unemployment Rate steadied at 3.7%. The annual wage inflation, as measured by the Average Hourly Earnings, rose to 5.1% from 4.9% in October. Meanwhile, the Labor Force Participation Rate dropped to 62.1% from 62.2%. A mixed US labor market report gave a temporary boost to the US Dollar but bears returned with force markets were reminded of the dovish comments from the Federal Reserve Chair Jerome Powell earlier in the week. The Federal Reserve’s preferred inflation gauge, the Core PCE Price Index, declined to 5% YoY in October vs. September’s 5.2%. The data showed signs of inflation cooling and offered credence to the recent dovish Federal Reserve pivot.

Risk flows return on China optimism down the US Dollar

Another factor weighing heavily on the US Dollar this Monday is the more signs of China easing pandemic policies, as the country expands reopening to the cities of Shanghai and Hangzhou. A gradual shift away from China’s strict Covid Zero policy, amid elevated cases and public protests, is boosting the market sentiment. China’s benchmark Shanghai Composite Index is up over 1.50% while the US Treasury bond yields are up nearly 1% on the day. Gold price remains undeterred by the uptick in the US Treasury bond yields, as broad-based US Dollar weakness overshadows. Gold has tested the $1,810 round figure, adding 0.65% on the day, at the time of writing.

Gold price technical outlook: Daily chart

Gold price has taken out the August 10 high at $1,808, now heading closer toward the July 4 high at $1,814.

Bulls remain in control after Gold price closed the week above the critical 200-Daily Moving Average (DMA) at $1,796 on Friday.

The 14-day Relative Strength Index (RSI) has turned flat just beneath the overbought territory, suggesting the potential upside in Gold price.

The next bullish target is seen at the $1,820 round figure.

In case of any retracement in Gold price, the 200DMA resistance-turned-supoprt gives way, then a drop toward the November 15 high at $1,787 cannot be ruled out.

The correction could then extend toward the previous day’s low of $1,778.