Gold Price Forecast: XAU/USD has moved back above $1,800

  • Gold advances during the New York session, some 0.19%.
  • A mixed market mood and broad US dollar weakness keep investors using gold to hedge higher inflation as US PCE data looms.
  • XAU/USD Technical Outlook: Neutral-bearish, unless gold bulls reclaim $1,793.

Update: Gold (XAU/USD) has perked up on the day following an offer in the greenback and a bid in global equities. US real yields are the focus pertaining to Federal Reserve expectations. The yellow metal has benefitted due to the market being well priced for a hawkish Fed in what has recently turned into risk-on market conditions. However. analysts at TD securities warned that ”the yellow metal could begin to lose steam so long as Fed expectations remain as status quo. In this sense, omicron fears and their potential impact on the economy will be a key focus in the near-term, and we would likely need to see economic weakness generate doubts that the Fed will be able to deliver on their hawkish stance for the yellow metal to maintain the recent momentum.”

End of update

Gold (XAU/USD) edged higher during the New York session, trading at $1,791.63 at the time of writing. The market sentiment is upbeat, though US equity indices fluctuate between gainers and losers. Additionally, the US dollar weakened across the board, while US T-bond yields, with the 10-year benchmark note, retreats after testing the 1.50% threshold in the overnight session.

Factors like investors assessing the economic impact of the Omicron variant and the delay of the US President Joe Biden Build Back Better agenda dented market participants’ mood.

That said, the US Dollar Index, which measures the greenback’s value against a basket of six currencies, edges lower 0.27%, down to 96.25. Furthermore, as previously mentioned, the 10-year Treasury yield is down some three basis points, at 1.457%, from 1.487% reached on Tuesday’s session.

Before Wall Street opened, the US economic docket featured one of the last waves of data of 2021. The US Bureau of Economic Analysis reported that the US economy in the third-quarters grew at an annualized pace of 2.3%, higher than the 2.1% estimated. Moreover, the Personal Consumption Expenditures Prices rose by 5.3%, according to expectations.

In the overnight session, gold remained subdued in a narrow range, between $1,785-$1,795. In the mid-European session, the non-yielding metal trended up, though faced strong resistance at the 100-hour simple moving average (SMA), retreating at press time to current levels. That said, unless XAU/USD decisively breaks above $1,793, the precious metal would remain bearish biased.

XAU/USD Price Forecast: Technical outlook

The XAU/USD daily chart depicts indecision, as shown by the daily moving averages (DMAs) almost “horizontally” contained in the $1,787-$1,800 range. From a market structure perspective, unless gold bulls reclaim $1,792.95, the bias is bearish, though to resume the trend, USD bulls would need a daily close below the December 16 pivot low at $1,775.40.

On the way south, the first support would be the December 16 low at $1,775.40. A break beneath that level would exert downward pressure on the precious metal, exposing crucial support areas. The next one would be the December 2 low at $1,761.72, followed by the December 15 cycle low at $1,752.44

To the upside, the first resistance would be the December 8 cycle high at $1,792.95.  A clear break of that level would immediately expose $1,800, followed by the September 3 swing high at $1,834.


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