Gold Price Forecast: XAU/USD perking up in Asia, $1,795 is key

Update: Gold (XAU/USD) was consolidated on Monday and ended slightly lower. The price in Asia is perking up by 0.16% on the day so far and straddles the $1,780 mark between a low of $1,778.59 and $1,782.04. The easing concerns of the potential economic impact of Omicron saw a risk-on tone pile into the commodity sector, but that did little to support gold.

The yellow metal struggled to thrive as investors searched for opportunities in yield. Gold was also weighed by the US dollar moving higher as risk-off currencies, such as the yen and CHF, were unwound. China’s easing and support for real estate also boosted sentiment. 

Meanwhile, there is also a focus on the Federal Reserve this month and the central bank's decision to retire the term 'transitory' is potentially a positive for gold, according to analysts at TD Securities.

''With both an accelerated taper and more than three rate hikes priced in for 2022, the balance of risks for gold positioning is shifting to the upside. CTA short-covering could ultimately catalyze higher gold prices, should prices break north of $1795/oz.''

End of update

Gold (XAU/USD) edges lower during the New York session, trading at $1,779, down some 0.25 %, at the time of writing. The market sentiment is positive due to good news regarding the omicron variant; even though it is highly transmissible, cases are mild, thus hurting safe-haven non-yielding assets, like precious metals.

Additionally, the sudden shift of the Federal Reserve led by Chair Jerome Powell, who said that inflation is no longer “transitory” and favouring a fast bond-taper, boosted the greenback. That alongside higher US T-bond yields with the 10-year benchmark note rate rising almost ten basis points, up to 1.436%, lifts the US dollar against the yellow-metal. 

During the day, XAU/USD recovered some of Friday’s losses. However, it has failed to break above the high of the previous-mentioned day at $1,786, which confluences with the 200-hour simple moving average (HSMA), which acted as dynamic resistance, sending gold sliding towards $1,777. Nevertheless, upside risks are mounting lately, as the non-yielding metal broke the 50 and the 100-HSMA, as gold bulls threaten to re-test the $1,800 figure.

XAU/USD Price Forecast: Technical outlook

In the last hour, gold seesawed around the $1,779-87 area, which coincided with the 100 and the 200-hour simple moving averages (HSMA’s), respectively. It looks like this consolidation phase could break to the upside, even though the 200-HSMA is above the spot price, but it is worth noting that XAU/USD broke above the 50 and the 100-HSMA in the last couple of hours.

In the outcome of breaking above the range, the first resistance would be the Monday R1 daily pivot at $1,792. A breach of the latter would expose $1,800, but it will find on its way up, the R2 daily pivot at $1,798.60 

On the flip side, a break below the bottom of the range would expose the S1 daily pivot at $1,771, followed by the December 3 swing low at $1,766 and then the December 2 low at $1,762.