Gold Price Analysis: XAU/USD consolidates close to Tuesday highs around $1815


  • XAU/USD rallied more than 2% on Tuesday to close the session comfortably back above the $1800 mark.
  • A rise in inflation expectations prompted by signs of inflationary pressures in global PMI reports spurred the move.

Spot gold (XAU/USD) prices saw significant upside on Tuesday, rallying more than 2% from roughly $1780 to current levels around $1815.

Global PMI reports suggest inflation incoming

The US 10-year inflation breakeven rose above 1.8% on Tuesday (an indication that markets expect inflation to average 1.8% over the next 10 years), its highest level since May 2019. Meanwhile, PMI reports from around the world on Tuesday also pointed to the likelihood of rising inflation;

China’s Caixin PMI survey said that “inflationary pressures grew as prices rose at a faster pace” and South Korea’s PMI report said that “the rise in average cost burdens was strong overall, which panel members associated with widespread increases in raw material prices. Higher supplier costs were partially passed on to customers resulting in a further, albeit marginal, rise in output charges”. Meanwhile, Tuesday’s European morning session final manufacturing PMIs out of the Eurozone said “shortages of inputs are meanwhile contributing to higher price pressures, with suppliers' increasingly able to raise prices amid sellers' market for many key inputs. Such restoration of pricing power bodes well for profits & helps ease broader deflationary concerns” and the UK report said "input cost inflation accelerated to a 2-yr high in November. Companies responded by raising their average selling prices to the greatest extent in the year so far”.

Market’s seem to have sensed the smell of higher incoming inflation in the air; US treasury yields shot higher on Tuesday (10-year bond yields rising roughly 8bps to 0.921%) and the curve steepened (the 2-year 10-year bond yield spread widened by just under 6bps).

However, with Fed officials continuing to signal rates at zero until at least 2023 and a continuation of accommodative policy into the foreseeable future, the chances are that US bond yields will not rise as much as inflation expectations, meaning that US real-yields are likely to remain well below 0.0%.

As many analysts have pointed out over recent weeks, the subdued real rate environment and the fact that real rates are expected to remain at lows for the foreseeable future boosts the attractiveness of precious metals as an alternative investment to fixed income. Likely, this narrative was one of the key reasons why precious metal bulls were able to regain control on Tuesday, as well as those more enticed to buy precious metals at favourable prices compared to recent months.

Whether Tuesday’s move to the upside signals a resumption of the precious metals bull market is one thing, but the low real rate narrative is likely to continue to offer support to the complex for the foreseeable future.

XAU/USD gains capped by last Wednesday/Thursday highs

XAU/USD’s gains on Tuesday were capped at last Wednesday and Thursday’s highs around the $1818 mark. If this level is to go, gold prices would have a clean run back towards the next significant area of resistance around $1850, an area which coincides with mid-September and early November lows.

If the bulls lose steam, however, the pair is likely to revert lower back towards support around the $1800 mark, which also coincides with the 200-day moving average. Below that, $1765 is a significant area of support; not only is it Monday’s lows, but was also the high back on 18 May.

XAU/USD four hour chart

xauusd

Share: Feed news

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended content

Editors’ Picks

Gold gives away some gains, slips back to $2,980

Gold gives away some gains, slips back to $2,980

Gold retraced from its earlier all-time highs above the key $3,000 mark on Friday, finding a footing around $2,980 per troy ounce. Profit-taking, rising US yields, and a shift to a risk-on environment seem to be putting the brakes on further gains for the metal.

Gold News
EUR/USD remains firm and near the 1.0900 barrier

EUR/USD remains firm and near the 1.0900 barrier

EUR/USD is finding its footing and trading comfortably in positive territory as the week wraps up, shaking off two consecutive daily pullbacks and setting its sights back on the pivotal 1.0900 mark—and beyond.

EUR/USD News
GBP/USD remains depressed, treads water in the low-1.2900s

GBP/USD remains depressed, treads water in the low-1.2900s

GBP/USD is holding steady in consolidation territory after Friday’s opening bell on Wall Street, hovering in the low-1.2900 range. This resilience comes despite disappointing UK data and persistent selling pressure on the USD.

GBP/USD News
Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Cryptocurrencies sector rose by 0.13% in early European trading on Friday, adding $352 million in aggregate valuation. With BNB, OKB and BGB attracting demand amid intense market volatility, the exchange-based native tokens sector added $1.9 billion.

Read more
Week ahead – Central banks in focus amid trade war turmoil

Week ahead – Central banks in focus amid trade war turmoil

Fed decides on policy amid recession fears. Yen traders lock gaze on BoJ for hike signals. SNB seen cutting interest rates by another 25bps. BoE to stand pat after February’s dovish cut.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025