Gold Price Forecast: XAU/USD eyes $1,780 amid recent USD weakness


  • Gold gained some positive traction on Tuesday and snapped two days of the losing streak.
  • Retreating US bone yields undermined the USD and extended some support to the metal.
  • Hawkish Fed/BoE might cap gains and warrants some caution for aggressive bullish traders.

Update: Gold prices lock in some fresh gains above $1,770 amid a recent pullback in the greenback. The US benchmark Treasury yields trade lower at 1.57% with 0.57% losses, which weigh on the greenback.  A lower USD valuation enhances the appeal of the precious metal for the other currencies holders. Gold prices score more than 0.50% on Tuesday amid concerns about the patchy global growth recovery. The weak US Factory Output and China’s slower growth in Q3 added to the optimism surrounding the precious metal.

In addition to that, the Reserve Bank of Australia’s (RBA) latest monetary policy minutes highlighted the risk of the Delta COVID-19 variant on the country’s economic recovery. Furthermore, India, the world’s second-largest gold consumer, recorded a jump of 252% in its gold's import to $24 billion in the April-September period as the festive demand picking up amid easing coronavirus restrictions.    

 

Gold edged higher during the Asian session on Tuesday and moved back above the $1,770 level in the last hour. The XAU/USD, for now, seems to have snapped two days of the losing streak and was supported by a combination of factors. The uptick was sponsored by the emergence of fresh selling around the US dollar, which tends to benefit dollar-denominated commodities, including gold. Following the previous day's good two-way price moves, the USD met with some fresh supply amid a modest pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that acted as a tailwind for the dollar-denominated commodity.

Apart from this, a generally softer tone around the equity markets extended additional support to the safe-haven precious metal. Worries that the recent widespread rally in commodity prices will stoke inflation and derail the global economic recovery continued weighing on investors' sentiment. The market concerns were further fueled by Monday's disappointing Chinese macro data, showing that the economic growth decelerated sharply from 7.9% to 4.9% during the third quarter. That said, hawkish signals by major central banks might hold traders from placing aggressive bullish bets around the non-yielding gold and cap gains.

Market participants seem convinced that the Fed will begin rolling back its massive pandemic-era stimulus by the end of this year. Investors have also started pricing in the possibility of an interest rate hike in 2022 amid fears about a faster than expected rise in inflation. Adding to this, the Bank of England Governor Andrew Bailey sent a fresh signal that the British central bank is gearing up to raise interest rates to counter growing inflation risks. Growing market acceptance about the prospects for a policy tightening by the Fed/BoE warrants some caution before positioning for any further appreciating move for gold.

There isn't any major market-moving economic data due for release on Tuesday, leaving gold at the mercy of the broader market risk sentiment and bond yields. That said, scheduled speeches by BoE MPC Member Catherine Mann and Governor Andrew Bailey might provide some impetus to gold. Later during the US session, comments by Fed Governor Michelle Bowman will influence the USD price dynamics and produce some meaningful trading opportunities around gold.

Technical outlook

From a technical perspective, last week's sharp rejection slide from the 100/200-day SMA confluence near the $1,800 mark stalled near the $1,760 static support. This makes it prudent to wait for some follow-through selling before confirming that the recent move up has run out of steam and placing fresh bearish bets. The next relevant support is pegged near the $1,750 region, below which gold prices could accelerate the fall towards September monthly swing lows, around the $1,722-21 zone.

On the flip side, immediate resistance is pegged near the $1,780-82 region, which if cleared decisively should allow bulls to make a fresh attempt to conquer the $1,800 mark. Some follow-through buying has the potential to lift the XAU/USD back towards the $1,832-34 heavy supply zone. The $1,810 area, followed by the $1,818 region could act as an intermediate hurdle on the way up.

Gold daily chart

fxsoriginal

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD defends 1.1300 even as yields refresh 10-week low

EUR/USD remains sidelined near 1.1320 during early Thursday morning in Asia, following a mildly negative daily performance. The currency major’s latest moves disagree with the fall in the US Treasury yields and the market sentiment.

EUR/USD News

GBP/USD stays pressured towards 1.3155

GBP/USD holds lower grounds near 1.3280, retreating towards the yearly low during Thursday’s Asian session. Although the cable pair grinds above the 2021 bottom marked on Tuesday, descending RSI line and sustained trading below the short-term key support, now resistance, keeps bears hopeful.

GBP/USD News

Gold: 200-DMA tests the bulls despite softer yields, RSI divergence

Gold defends short-term key support despite multiple failures to cross the 200-DMA, easing to $1,780 during Thursday’s Asian session. The yellow metal snapped a two-day downtrend the previous day amid the US dollar pullback and softer yields.

Gold News

SafeMoon ready to bounce after 30% bearish fakeout

SafeMoon price action is nearly singular in its current behavior and structure. Very few, if any, significant altcoins have displayed the kind of price behavior SafeMoon has. SafeMoon price faced a strong sell-off during the early part of the Tuesday trading session, collapsing nearly 30% from the daily open of $0.0000030 to $0.0000023. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures