Gold Price Forecast: XAU/USD climbs above $1,850 on improved mood, ahead of FOMC minutes

Gold prices are bolstered by an upbeat market sentiment keeping the US Dollar offered.
Investors cheered China’s planning to support the property market and the relaxation of its Covid zero-tolerance policy.
A busy US economic docket keeps traders wary of propelling the US Dollar.
Minnesota Fed Kashkari: The Fed must avoid cutting rates prematurely.

Christian Borjon Valencia FXStreet

Gold price rallied to eight-month highs around $1,865.15, though slightly retraced some of its gains amidst an upbeat market sentiment, spurred by China’s support to its housing market, alongside its border reopening, as it relaxes Covid-19 zero-tolerance measures. Investors get ready for a busy economic calendar in the United States (US), while Federal Reserve’s (Fed) officials began to cross newswires. At the time of writing, the XAU/USD is trading at $1,856.01, above its opening price by 1%.

Upbeat market mood spurred by China’s news underpinned Gold

Wall Street is poised to open higher, as shown by equity futures rising, while the US Dollar (USD) weakens. Factors like Chinese authorities planning to deliver additional support to property developers, aimed to relax liquidity stress in some “too-big-to-fail” developers, sparked a rally in Asian stocks. Meanwhile, China’s reopening was cheered by investors, even though the country reported 5 Covid deaths on January 3, vs. three from the previous day.

US Dollar weakens as traders brace for US data

Aside from this, investors waiting for US economic data has bolstered Gold prices, as Tuesday’s US Dollar longs exited ahead of market-moving data. Following the S&P Global Manufacturing PMI release on Tuesday, the Institute for Supply Management (ISM) for December is expected to drop from 49.0 to 48.5. Also, the JOLTs report is estimated to hit 10 M, vs. 10.334M in the previous month, while the main spotlight would be the release of the Federal Open Market Committee (FOMC) December meeting minutes.

Minnesota Fed Kashkari sees rates around 5.4%

In the meantime, Minnesota’s Fed President Neil Kashkari (voter in 2023) said that it would be appropriate to continue to hike rates “at least at the next few meetings” until inflation has peaked and foresees the Federal Funds rate (FFR) at 5.4%. He added that the Fed must avoid cutting the policy rate prematurely and would consider cutting only when it’s convinced inflation is on its way back down to 2%.

Gold Daily Chart

Gold Key Technical Levels

XAU/USD

Overview
Today last price	1857.12
Today Daily Change	18.96
Today Daily Change %	1.03
Today daily open	1838.16

Trends
Daily SMA20	1803.06
Daily SMA50	1757.02
Daily SMA100	1724.08
Daily SMA200	1779.26

Levels
Previous Daily High	1850.03
Previous Daily Low	1824.7
Previous Weekly High	1833.38
Previous Weekly Low	1797.11
Previous Monthly High	1833.38
Previous Monthly Low	1765.89
Daily Fibonacci 38.2%	1840.35
Daily Fibonacci 61.8%	1834.38
Daily Pivot Point S1	1825.23
Daily Pivot Point S2	1812.3
Daily Pivot Point S3	1799.9
Daily Pivot Point R1	1850.56
Daily Pivot Point R2	1862.96
Daily Pivot Point R3	1875.89

Author

Christian Borjon Valencia

FXStreet

Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.

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