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Gold Price Forecast: XAU/USD grinds higher toward $1815 on falling US yields, weaker USD

  • Gold price holds onto gains above $1,800 amidst thin liquidity conditions.
  • The US labor market appears to ease as Initial Jobless Claims increase.
  • Global central banks raised their holdings of Gold in Q3 by close to 400 metric tons.
  • Gold Price Analysis: Holding above $1,800, eyeing June’s high of $1,879.45.

Gold Price advances after hitting a daily low of $1,803.30, gaining 0.83% during the North American session bolstered by falling US bond yields, which weakened the US Dollar (USD). Meanwhile, investors’ sentiment improved even though China relaxing Covid-19 policy keeps the health system pressured. At the time of writing, the XAU/USD is trading at $1,817.27, up by 0.74%.

Investors’ fears calmed following worse-than-expected US jobless claims data

Wall Street extends its gains on the penultimate trading day of the year. The US Department of Labor revealed Initial Jobless Claims for the week ended on December 24 jumped to 225K, in line with expectations, and 9K above the previous week’s record. Continuing claims rose to 1.7 million in the week that ended on December 17, the highest since early February.

Once the report hit newswires, Gold prices increased as investors’ fears for a tighter labor market eased. Additionally, US Treasury bond yields dropped, with the 10-year benchmark yield falling five bps to 3.830%. Consequently, the greenback weakened, as shown by the US Dollar Index (DXY), which tracks the US Dollar performance against a basket of peers, diving 0.54%, at 103.901.

According to the World Gold Council (WGC), global central banks bought Gold at the highest rate since 1967, likely led by Russia and China’s institutions. Central banks bought 399 metric tons of Gold in Q3, against 186 metric tons in Q1 and 88 metric tons in Q2.

The US economic docket will finish the year featuring the Chicago PMI on Friday. It will kick off the next year with a busy calendar, reporting S&P Global and ISM PMIs, labor market data, and the Balance of Trade.

Gold Price Analysis: Technical outlook

From a daily chart perspective, the XAU/USD remains upward biased, though unable to crack December’s high of $1,833.29. Traders should be aware that the yellow metal prices have been tracking the 20-day Exponential Moving Average (EMA) since mid-November, and Gold is trading above its 200-day EMA. Therefore, further upside is expected.

That said, XAU/USD’s first resistance would be the MTD high of $1,833.29. A breach of the latter will expose June’s high of $1,879.45, followed by the $1,900 mark. As an alternate scenario, the XAU/USD first support would be $1,800. Break below would expose the 20-day EMA at $1,792.78, followed by the 200-day EMA at $1,765.98.

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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