Update: Gold (XAU/USD) is rising due to the inflation risks that the federal Reserve has clearly highlighted in recent rhetoric, switching from being on the fence to possibly taking action as soon as December. In Asia, the price of XAU/USD has rallied from a low of $1,780.88 to a high of $1,786.65 so far.  

The shift towards inflation at the Federal Reserve, despite the new coronavirus Omicron variant and less emphasis on the jobs market, is one that should be favourable to the gold bugs. Higher market volatility came as a consequence of recent Fed rhetoric and that is good for gold, bad for equities, and riskier asset classes.

The higher risk of 'persistent inflation' is where gold should thrive. Meanwhile, the Nonfarm Payrolls, while missing the prior and expectations, the data, in general, remains strong.  Prospects of a fast taper can be supportive of the greenback, especially following positive revisions and solid details such as a lower Unemployment Rate at 4.2% vs 4.5% expected and 4.6% prior. However, this does not remove the need for protection against inflation which gold is renowned for. 

End of update 

Gold (XAU/USD) retreats below $1,800, easing to $1,781 amid Monday’s initial Asian session, following the heaviest daily run-up in over two weeks.

The yellow metal cheered a surprise drop in the US Nonfarm Payrolls (NFP) data for November, 220K versus 550K forecast, the previous day. However, However, a 0.4% fall in Unemployment Rate to 4.2% and Average Hourly Earnings matched the 4.8% YoY forecast. Following the data, the US dollar offered a knee-jerk reaction before resuming the north-run as Fed fund futures rallied.

The odds of the Fed rate hike earlier got fuelled by comments from St Louis Fed President James Bullard who is also a voting member in 2022. The policymakers said, “Could look at raising interest rates before completing the taper.”

Other than the Fed-linked chatters, the risk-off mood also took clues from the spread of the South African covid variant, dubbed as Omicron, as well as talks surrounding the US-China tussles. After initially hitting Europe and the UK, the virus strain tightens its grip towards reaching the key global nations like the US and China. It should be noted, however, that global scientists are optimistic over the cure. Recently, US top Medical Officer Anthony Fauci backed Pfizer’s drug to be effective against Omicron while the news of chewing gum to stop the virus spread and the UK’s push for treatment also keeps traders hopeful.

Elsewhere, news that China’s Premier Keqiang promised a Reserve Requirement Ratio (RRR) cut to the International Monetary Fund (IMF), without specifying the date, per the ANZ, also weigh on sentiment. On the same line were the recent headlines from the Wall Street Journal (WSJ) saying, “China wants to put its first Atlantic military base in Equatorial Guinea, U.S. intelligence shows. The prospect has set off alarm bells in Washington.”

Against this backdrop, Wall Street closed negative and the US 10-year Treasury yields slumped to the lowest since late September on Friday. That said, the S&P 500 Futures lick its wounds with 0.15% intraday gains at the latest.

Moving on, a light calendar and cautious sentiment ahead of next week’s Federal Open Market Committee (FOMC) meeting may challenge gold price moves. Though, Friday’s US Consumer Price Index (CPI) for November will be crucial to watch, not to forget coronavirus headlines and central bank comments.

Technical analysis

A four-month-old support line joined a softer-than-expected US NFP to trigger gold’s corrective pullback from the monthly low. However, bearish MACD signals and downbeat RSI line challenge the recovery moves below the key 200-DMA level surrounding $1,792.

While a clear upside past $1,792 will give a free hand to the gold buyers targeting the $1,800 threshold, a six-week hold horizontal area near $1,814-16 and a horizontal line comprising tops marked in July and September, surrounding $1,834, will test any further advances.

Meanwhile, a downside break of the stated support line from August, near $1,765, isn’t a green signal for the gold bears as 61.8% Fibonacci retracement (Fibo.) level of August-November upside and a two-week-old support line, close to $1,760-59 region, will challenge the south-run.

Should gold prices drop below $1,759, an extended fall towards September’s low of $1,721 can’t be ruled out.

Gold: Daily chart

Trend: Pullback expected

Additional important levels

Overview
Today last price 1782.82
Today Daily Change -0.21
Today Daily Change % -0.01%
Today daily open 1783.03
 
Trends
Daily SMA20 1818.55
Daily SMA50 1792.15
Daily SMA100 1791.34
Daily SMA200 1791.49
 
Levels
Previous Daily High 1786.18
Previous Daily Low 1766.19
Previous Weekly High 1808.78
Previous Weekly Low 1761.99
Previous Monthly High 1877.23
Previous Monthly Low 1758.92
Daily Fibonacci 38.2% 1778.54
Daily Fibonacci 61.8% 1773.83
Daily Pivot Point S1 1770.75
Daily Pivot Point S2 1758.48
Daily Pivot Point S3 1750.76
Daily Pivot Point R1 1790.74
Daily Pivot Point R2 1798.46
Daily Pivot Point R3 1810.73

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

AUD/USD retreating from around 0.7000

AUD/USD retreating from around 0.7000

The AUD/USD pair hit 0.7008 before retreating, following US stocks’ behavior. Wall Street benefited from easing US government bond yields but ended the day mixed ahead of critical US data.

AUD/USD News

EURUSD bulls losing the battle around 1.0200

EURUSD bulls losing the battle around 1.0200

EUR/USD edged higher on Monday, but remains unable to clear the 1.0200 threshold, trading a handful of pips below the figure. The energy crisis in Europe and tensions with Russia undermined demand for the EUR.

EUR/USD News

Gold bulls looking to overcome the $1,800 barrier

Gold bulls looking to overcome the $1,800 barrier

Gold advanced on Monday, reaching an intraday high of $1,790.01 a troy ounce during the American afternoon, holding nearby. The greenback gave back the Nonfarm Payrolls report-inspired gains and eased on the back of retreating US government bond yields.

Gold News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Are your bags packed for FOMO Season?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Are your bags packed for FOMO Season?

The crypto market shows strength to start the second trading week of August, and key levels have been identified. Although it's still early market, current prices may be the ultimate discount in hindsight.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures