Gold Price Forecast: XAU/USD sits tight as traders mull inflation concerns


Update: Gold (XAU/USD) is holding on in bullish territory and is attempting to continue high following the dip at the start of the week. The price is flat in Asia around $1,868.00 and has stuck to a tight range between $1,870.94 and $1,866.33 so far.

The rest of the week could be determined by central bank speaks and events that include today's Reserve Bank of New Zealand's release of the Q4 Survey of Expectations. This is more of a compelling event ahead of the forthcoming interest rate decision. While gold is not directly correlated to such an event not rate decision next week, the theme around inflation certainly is a driving force. 

The yellow metal remains an ideal hedge against rising stagflationary winds. ''The tug-of-war between high inflation prints and market pricing for central bank hikes hasn't definitively concluded,'' analysts at ANX Bank argued. ''This leaves the yellow metal open to two-way risks, as it remains to be seen whether the technical breakout will be a sufficiently large catalyst to reverse the pervasively poor sentiment plaguing the precious metals complex.''

End of update

Gold (XAU/USD) ends Wednesday’s North American trading session with the highest daily gains in a week, edges around $1,867 as Asian traders braces for Thursday’s bell.

The yellow metal cheers the heavy pullback of the US Treasury yields that weighed on the US Dollar Index (DXY) amid a lack of major catalysts and ongoing inflation chatters. Also favoring the gold buyers is the mixed US housing numbers and policymakers’ indecision over the next moves of the Federal Reserve (Fed).

That said, US 10-year Treasury yields retreat from the highest levels since October 26 to post the heaviest daily fall in a week while ending Wednesday’s US trading session around 1.59%, down 4.3 basis points (bps). DXY tracks bond yields and marks a first negative daily closing in three after refreshing the 16-month top during early Wednesday.

A light calendar and mixed US housing numbers allowed the traders to consolidate recent moves but the ongoing inflation fears and talks of the monetary policy tightening underpin gold’s safe-haven demand as the greenback steps back. US Housing Starts mark a surprise fall in October and the previous readings were also revised down while the Building Permits rose past expectations and prior during the stated period.

Fedspeak keeps trying to push back the inflation fears and tame the rate hike talks. However, the policy hawks aren’t defeated and hence challenge gold buyers. Recently, Charles L. Evans, the chief executive officer of the Federal Reserve Bank of Chicago said, “It will take until the middle of next year to complete the Fed's wind-down of its bond-buying program, even as the central bank remains 'mindful' of inflation.”

It’s worth noting that US President Joe Biden signaled that they have a lot to follow up on despite having a “good meeting” with China’s Xi after the first round of virtual meeting. Alternatively, US Treasury Secretary Janet Yellen announced the extension of the debt ceiling to December 15, versus the previous expiry of December 3, to underpin the risk-on mood earlier the previous day.

Amid these plays, US stocks closed lower and oil had to bear the burden of the US push to the key global energy players to release their strategic reserves.

Moving on, US Weekly Jobless Claims and Fedspeak could entertain gold traders amid a light calendar going forward. However, inflation and rate hike remain the key catalysts to watch.

Technical analysis

Gold remains on a front foot inside a weekly ascending trend channel. Also validating the bullish bias are the MACD signals, upward sloping but not overbought RSI line and sustained trading beyond 200-HMA.

However, sustained trading below a fortnight-long ascending trend line, around $1,887, restricts short-term advances of the metal. Adding to the upside filter is the upper line of the stated channel near $1,880 and the $1,900 threshold.

Meanwhile, a downside break of the channel’s support line, at $1,850, will defy the bullish formation but the gold sellers will need validation from the 200-HMA level of $1,843 to retake control.

Following that, gold prices become vulnerable to revisit $1,830 and $1,813-12 support levels before directing the bears to the $1,800 psychological magnet.

Gold: Hourly chart

Trend: Further upside expected

Additional important levels

Overview
Today last price 1867.05
Today Daily Change 16.39
Today Daily Change % 0.89%
Today daily open 1850.66
 
Trends
Daily SMA20 1812.47
Daily SMA50 1785.2
Daily SMA100 1791.32
Daily SMA200 1791.68
 
Levels
Previous Daily High 1877.23
Previous Daily Low 1849.74
Previous Weekly High 1868.71
Previous Weekly Low 1812.47
Previous Monthly High 1813.82
Previous Monthly Low 1746.07
Daily Fibonacci 38.2% 1860.24
Daily Fibonacci 61.8% 1866.73
Daily Pivot Point S1 1841.19
Daily Pivot Point S2 1831.72
Daily Pivot Point S3 1813.7
Daily Pivot Point R1 1868.68
Daily Pivot Point R2 1886.7
Daily Pivot Point R3 1896.17

 

 

Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar

EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar

The EUR/USD pair edges higher to 1.0672 during the early Thursday. The recovery of that major pair is bolstered by renewed selling pressure in the US Dollar and a risk-friendly environment.

EUR/USD News

GBP/USD remains capped below 1.2470, eyes on US data

GBP/USD remains capped below 1.2470, eyes on US data

The GBP/USD pair trades on a softer note around 1.2450 on Thursday. The softer UK inflation data prompted the expectation that the Bank of England will start lowering interest rates in the coming months, which weighs on the Pound Sterling against the Greenback. 

GBP/USD News

Gold rebounds on market caution, aims to reach $2,400

Gold rebounds on market caution, aims to reach $2,400

Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.

Gold News

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.

Read more

Investors hunkering down

Investors hunkering down

Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.

Read more

Forex MAJORS

Cryptocurrencies

Signatures