- Gold keeps Friday’s pullback from 200-SMA despite mild intraday gains.
- Challenges to US stimulus, coronavirus woes and Fed rate hike concerns test buyers.
- Yields, US stock futures print losses in Asia, DXY struggles to keep biggest daily gains in six weeks.
- Gold Weekly Forecast: XAU/USD eyes $1,835 as next target heading into 2022
Update: Shortcoving remains in play following the Federal Reserve outcome and gold (XAU/USD) is firm in Asia. The price is running higher by some 0.22% at the time of writing, rising from a low of $1,798.16 to a high of $1,802.60 on the day so far. The perkiness follows Friday's sharp rise which completed three consecutive day's of higher highs. The bulls ran right into test the $1,814.30s before profit-taking ensued, sinking the price lower to close the day back under $1,800.
US real yields are lower while omicron fears are also making their way through tp the safe haven plays, likely supporting the precious metal. Meanwhile, US inflation themes will be back on the agenda for the week with PCE data out. ''We expect slowing ahead, but core PCE prices likely rose strongly again, albeit by less than the core CPI (0.42% vs 0.53%),'' analysts at TD Securities said,
''The YoY change likely rose to 4.6% from 4.1%, with total prices up to 5.6% from 5.0%. The report will likely show consumers digging into excess savings, with nominal spending outpacing income (+0.7% vs 0.2%) and the saving rate below its pre-COVID level.''
Additionally, Fedspeak will be important for the remaining days of the year. The analysts at TD Securities are expecting them to echo the more hawkish tone of the Fed, ''which could offer an offsetting factor as macro short-covering runs out of steam.''
End of update
Gold (XAU/USD) prices struggle to keep the biggest weekly gains since early November while taking rounds to $1,800, up 0.25% intraday during the early Asian session on Monday.
While the US dollar weakness and central-bank actions drove markets towards the traditional safe-havens like gold, fresh challenges to the risk appetite and seem to weigh on the yellow metal prices.
Among the key catalysts that spoil the mood, disappointments over US President Joe Biden’s multi-billion-dollars worth of aid package and the jump in coronavirus fears, mainly linked to the South African variant called Omicron, are the latest ones. Also contributing to the risk-off mood could be the fresh chatters over the Fed-rate-hike.
US Democrats seem on the brink of failure to push for voting on the Build Back Better (BBB) plan after the key Senator refused to back the stimulus. “West Virginia's Joe Manchin appeared to deal a fatal blow to President Joe Biden's signature domestic policy bill, known as Build Back Better, which also aims to expand the social safety net and tackle climate change,” said Reuters.
On a different page, COVID-19 woes also escalate, particularly in the West, as the markets approach the holiday season. New York Times said, “Dr. Anthony S. Fauci, the nation’s top infectious disease expert, warned on Sunday that the extraordinarily contagious Omicron variant of the coronavirus was raging worldwide and that it was likely to cause another major surge in the United States, especially among the unvaccinated.”
Not only in the US but the Omicron fears are also on the spike in the UK and Europe. Recently, the Telegraph signaled that UK PM Boris Johnson may announce further activity restrictions for Christmas. The nation registered an all-time high in covid cases, not to forget a 52% jump in the weekly count.
Elsewhere, escalating tussles between the US and China joins the fresh calls of the US Federal Reserve (Fed) rate hike also exert downside pressure on the market sentiment. On Friday, comments from Fed Board of Governors member Christopher Waller propelled the US dollar by saying, per Reuters, “The ‘whole point’ of the Fed's decision to accelerate the pace of its QE taper was to make the March Fed meeting "live" for a first rate-hike.”
Against this backdrop, US 10-year Treasury yields dropped 2.4 basis points (bps) to 1.378% while the S&P 500 Futures drop 0.22% intraday by the press time.
Given the lack of major data/events, gold prices are likely to take clues from risk catalysts and the risk-off mood may challenge the bulls.
Gold prices fade bounce off an ascending support line from early November, backed by RSI pullback from the overbought territory and receding bullish bias of the MACD.
With this, the quote drops back towards 100-SMA level surrounding $1,784 before testing the stated support line near $1,765. However, the monthly low of $1,753 and September’s bottom close to September’s low around $1,721 will challenge gold bears afterward.
On the flip side, a clear upside break of 200-SMA level of $1,808 will need bullish confirmation from the 50.0% Fibonacci retracement level of a decline from mid-November, near $1,815 to aim for the early November’s swing high near $1,832.
Overall, gold prices are likely to witness a pullback but the stated support line challenges the bears.
Gold: Four-hour chart
Trend: Further weakness expected
Additional important levels
|Today last price||1800.9|
|Today Daily Change||4.68|
|Today Daily Change %||0.26%|
|Today daily open||1796.22|
|Previous Daily High||1814.33|
|Previous Daily Low||1795.87|
|Previous Weekly High||1814.33|
|Previous Weekly Low||1753.01|
|Previous Monthly High||1877.23|
|Previous Monthly Low||1758.92|
|Daily Fibonacci 38.2%||1802.92|
|Daily Fibonacci 61.8%||1807.28|
|Daily Pivot Point S1||1789.95|
|Daily Pivot Point S2||1783.68|
|Daily Pivot Point S3||1771.49|
|Daily Pivot Point R1||1808.41|
|Daily Pivot Point R2||1820.6|
|Daily Pivot Point R3||1826.87|
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.