- Gold recovers amid stimulus optimism, USD weakness.
- T-yields and Wall Street rally to check gold’s upside attempts.
- Gold could track silver prices as the retail-trade frenzy cools-off.
Gold (XAU/USD) staged an impressive bounce from two-month lows on Friday, although ended the week deep in the red above the $1800 mark. Gold tumbled to $1785 on Thursday amid the relentless surge in the US dollar across its main competitors alongside the Treasury yields, in light of the relative strength of the US economic recovery. However, the XAU bulls regained control on Friday, as mixed US employment data cast clouds over the economic optimism, which downed the greenback. The world’s biggest economy added a meager 49K jobs last month despite the unemployment rates ticking down to 6.3% in the reported month.
The inflation-hedge, gold, also benefitted from the renewed optimism around President Joe Biden’s $1.9 trillion stimulus package. Democrats in Congress moved to pass the stimulus plan within two weeks without GOP support, using a parliamentary procedure known as reconciliation.
Starting out the week this Monday, gold has returned to the red zone, although the bulls remain hopeful amid the continued broader market optimism on stimulus hopes. Meanwhile, fresh concerns over the covid vaccines’ efficacy against the South African strain could also offer some support to the precious metal. An increase in physical demand for gold ahead of China’s Lunar New Year holiday season and a broadly subdued US dollar could help put a floor under the prices. However, the recovery could remain in check amid rallying Treasury yields and upbeat sentiment on Wall Street.
Gold Price Chart - Technical outlook
Gold: Hourly chart
The hourly chart shows that gold is holding fort above the upward-sloping 21-hourly moving average (HMA), now at $1810. A sustained break below the latter is needed to negate the recovery momentum.
Since a bullish crossover is confirmed on the said timeframe, with the 21-HMA having crossed the 50-HMA from below, the buyers keep their eyes on the bearish 100-HMA at $1823.
The Relative Strength Index (RSI) has ticked higher above the midline, suggesting that there is more scope to the upside. A move above the 100-HMA would expose the 200-HMA hurdle at $1836.
On the flip side, the downward-sloping 50-HMA at $1806 could come to the bull’s rescue if the 21-HMA support is caved in.
The next relevant support for the bright metal is seen at Friday’s low of $1792.
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
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.