Gold Price Forecast: XAU/USD sticks to modest gains, lacks follow-through beyond $1,855


Share:
  • Gold consolidates the heaviest daily fall in two weeks following a pullback from five-month high.
  • Risk appetite dwindles amid stimulus hopes, immediate relief from US debt ceiling talks and Fed rate hike concerns.
  • Sino-American ties may have a long way to impress markets, Fedspeak in focus.
  • Gold Price Forecast: Corrective decline could reach 1,830

Update: Gold regained some positive traction on Wednesday and reversed a part of the overnight sharp intraday pullback from over five-month highs. The XAU/USD held on to its modest gains heading into the European session and was last seen trading just below the $1,855 level. The prevalent cautious mood around the equity markets turned out to be a key factor that acted as a tailwind for the safe-haven XAU/USD. This, along with concerns about rising consumer prices, further benefitted the metal's appeal as a hedge against inflation.

That said, the prospects for an early policy tightening by the Fed held bulls from placing aggressive bets and kept a lid on any meaningful gains for the non-yielding yellow metal. The markets have been pricing in the possibility for an eventual Fed rate hike move by July 2022 amid the continuous surge in inflationary pressure. This was reinforced by elevated US Treasury bond yields, which pushed the US dollar to a 16-month peak and might further collaborate to cap the upside for the dollar-denominated commodity, at least for now.

Previous update: Gold (XAU/USD) prints mild intraday gains around $1,855 during early Wednesday. The metal witness a volatile session on Tuesday that snatched the quote from a multi-day peak towards marking the heaviest daily loss in a fortnight.

The metal’s latest consolidation could be linked to the sluggish US Treasury yields, as well as the US Dollar Index (DXY), after a two-day uptrend. That said, the US 10-year Treasury yields pause around 1.64% after the recent run-up to renew the highest levels since October 26 whereas the DXY clings to a 16-month high around 95.90. Also favoring the gold buyers could be the firmer stock futures, following the upbeat Wall Street close.

Comments from San Francisco Federal Reserve Bank President Mary Daly contradict the previously hyped need for the Fed rate hike, by St. Louis Fed President James Bullard, as well as ex-US Treasury Secretary Lawrence Summers and former New York Fed President Bill Dudley.

In addition to the challenges to Fed hawks, easing pressure to discuss the debt ceiling extension also helps the gold buyers to remain hopeful. Recently, US Treasury Secretary Janet Yellen offered some relief to the markets by announcing a bit more time before the debt ceiling expires, from December 03 to 15, due to US President Biden’s latest stimulus.

Additionally, a lack of major data/events in Asia and no major entertainment from the talks between US President Joe Biden and his Chinese counterpart Xi Jinping also allow gold traders to recover the previous day’s losses.

It’s worth noting that, an eight-month high US Retail Sales for October, 1.7% MoM versus 1.4% expected, joined strong US Industrial Production and housing market data to enable Fed policymakers in pushing the rate hike concerns.

Hence, Wednesday’s light calendar will highlight the Fedspeak to reconfirm the policymakers’ bullish bias and challenge the gold traders.

Technical analysis

Overbought RSI conditions triggered the gold prices pullback from a multi-day peak, not to forget dragging it back from a yearly resistance line, the previous day. However, the yellow metal remains above a longer-term previous resistance line from August 2020, around $1,828 by the press time.

Given the bullish MACD signals and the absence of overbought RSI at present, as well as sustained trading beyond the key trend line, gold prices are likely to remain directed towards the descending resistance line from January 2021, near $1,868.

Should gold buyers manage to conquer the $1,868 hurdle, the quote’s run-up towards another resistance line, from September 2020 close to $1,906, can’t be ruled out.

Meanwhile, further weakness may aim for the $1,828 level comprising resistance-turned-support line whereas sustained trading below the same could recall sellers targeting October’s peak of $1,813.

Gold: Daily chart

Trend: Bullish

Additional important levels

Overview
Today last price 1855.37
Today Daily Change 4.71
Today Daily Change % 0.25%
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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

USD/JPY tumbles toward 132.00 after Japan confirms 'stealth intervention'

USD/JPY tumbles toward 132.00 after Japan confirms 'stealth intervention'

USD/JPY is sinking toward 132.00 in the Tokyo open as Japan's Finance Ministry confirmed a  stealth intervention in the forex market. The BoJ conducted an intervention in the yen on instructions from the Finance Ministry. Focus shifts to Fed's Powell. 

USD/JPY News

AUD/USD grinds above 0.6860 key support on softer Aussie trade surplus, RBA, Fed’s Powell eyed

AUD/USD grinds above 0.6860 key support on softer Aussie trade surplus, RBA, Fed’s Powell eyed

AUD/USD remains sidelined around the intraday high near 0.6890, portraying the typical pre-data anxiety, as the Aussie pair traders await the Reserve Bank of Australia’s (RBA) monetary policy meeting announcements on early Tuesday.

AUD/USD News

Gold struggles below $1,900 as Federal Reserve Chairman Jerome Powell’s speech looms

Gold struggles below $1,900 as Federal Reserve Chairman Jerome Powell’s speech looms

Gold price (XAU/USD) treads water around $1,865, following a corrective bounce off the one-month low, as the bullion traders await Federal Reserve (Fed) Chairman Jerome Powell’s speech amid hawkish bias over the United States central bank’s next move.

Gold News

Will Binance Coin price face a drawdown as Binance suspends USD bank transfers from February 8?

Will Binance Coin price face a drawdown as Binance suspends USD bank transfers from February 8?

Binance is the biggest cryptocurrency exchange in the world. It also emerged as a key player in the crypto industry owing to its initiatives following the FTX collapse in November 2022.

Read more

Reserve Bank of Australia Preview: No choice but to keep hiking rates Premium

Reserve Bank of Australia Preview: No choice but to keep hiking rates

The Reserve Bank of Australia (RBA) will announce its monetary policy decision on February 7, with the Board expected to pull the trigger by another 25 basis points (bps). 

Read more

Forex MAJORS

Cryptocurrencies

Signatures