XAU/USD outlook: Gold continues to shine, looks for retest of a record high

XAU/USD

Gold hit new highest in nearly two months on Friday, following break above recent range top ($4264) which signaled continuation of recovery leg from $3886 (Oct 28 low) and extension through psychological $4300 barrier.

The yellow metal shined on improved sentiment, as markets expect more Fed rate cuts in the next year, despite cautious tone from the central bank, particularly based on uncertainty over still elevated inflation.

Lift above $4300, the last significant obstacle en-route to $4381 record high, verified bullish signal and opened way for further advance.

Bullish daily studies support the notion, though headwinds on approach to key resistance at $4381 should be anticipated, due to overbought conditions and Friday’s profit-taking by many investors.

Broken $4300 level reverted to solid support, with potential deeper dips to hold above former pivotal barrier at $4264, to keep bulls in play and offer better buying opportunities.

Meanwhile, markets will closely watch results of today’s meeting of EU government which aims to change the current law of required consensus for any decision, by majority vote that would open way for indefinite freeze of Russian central bank held in Europe (mainly in Belgium).

Such decision will be a precedent which could cause huge negative impact, not only on EU, but on the global economy (Belgian government and the European Central Bank have already rejected a plan) and probably spark strong rally into safety, with gold expected to benefit the most.

Res: 4346; 4381; 4400; 4450.
Sup: 4320; 4300; 4264; 4250.