Gold Price Forecast: XAU/USD bounces off two-week low, Fed rate hike bets to cap gains


  • Gold attracted some dip-buying on Monday and stalled its recent corrective pullback.
  • Fresh COVID-19 jitters underpinned the safe-haven metal amid persistent inflation fears.
  • Hawkish Fed expectations, elevated US bond yields and stronger USD could cap gains.

Gold reversed an Asian session dip to near two-week lows and was last seen hovering near the top end of its daily trading range, just below the $1,850 level. The worsening COVID-19 situation in Europe turned out to be a key factor that benefitted traditional safe-haven assets and assisted the XAU/USD to attract some dip-buying on the first day of a new week. Austria said that it would be the first country in Western Europe to reimpose a full lockdown to tackle rising infections, while Germany warned that it may follow suit. Apart from this, persistent concerns about rising consumer prices further underpinned the precious metal's appeal as a hedge against inflation.

That said, hawkish Fed expectations and a stronger US dollar might keep a lid kept a lid on further gains for gold prices. In fact, the Fed funds futures indicate the possibility for an eventual Fed rate hike move by July 2022 and a high likelihood of another raise by November. The speculations were further fueled by Fed Governor Christopher Waller's comments, saying that the US central bank should speed up the pace of tapering to give more leeway to raise interest rates. The prospects for an early policy tightening by the Fed continued acting as a tailwind for the US Treasury bond yields. This, along with the prevalent bullish sentiment surrounding the US dollar, should hold back traders from placing aggressive bullish bets around the dollar-denominated commodity.

Nevertheless, gold, for now, seems to have stalled its corrective pullback from a multi-month peak set last week and snapped two successive days of the losing streak. In the absence of any top-tier economic releases from the US, the USD price dynamics and US bond yields will continue to play a key role in influencing the non-yielding yellow metal. Traders will further take cues from developments surrounding the coronavirus saga to grab some short-term opportunities around the XAU/USD.

Technical outlook

From a technical perspective, spot prices managed to find some support ahead of the $1,834-32 strong horizontal resistance breakpoint. This should now act as a key pivotal point and help determine the next leg of a directional move. A sustained break below would prompt some technical selling and accelerate the fall towards the $1,808-07 region en-route the $1,800 mark.

On the flip side, some follow-through buying beyond the $1,850 level might trigger a short-covering move and push gold towards the $1,865 resistance zone. The next relevant hurdle is pegged near the $1,875-77 area (multi-month highs), above which the XAU/USD could aim to reclaim the $1,900 mark for the first time since June.

Gold daily chart

fxsoriginal

Levels to watch

XAU/USD

Overview
Today last price 1848.57
Today Daily Change 1.47
Today Daily Change % 0.08
Today daily open 1847.1
 
Trends
Daily SMA20 1823.33
Daily SMA50 1789.27
Daily SMA100 1793.72
Daily SMA200 1792.03
 
Levels
Previous Daily High 1865.86
Previous Daily Low 1843.04
Previous Weekly High 1877.23
Previous Weekly Low 1843.04
Previous Monthly High 1813.82
Previous Monthly Low 1746.07
Daily Fibonacci 38.2% 1851.76
Daily Fibonacci 61.8% 1857.14
Daily Pivot Point S1 1838.14
Daily Pivot Point S2 1829.18
Daily Pivot Point S3 1815.32
Daily Pivot Point R1 1860.96
Daily Pivot Point R2 1874.82
Daily Pivot Point R3 1883.78

 

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD drops to two-year lows below 1.0400 after weak PMI data

EUR/USD drops to two-year lows below 1.0400 after weak PMI data

EUR/USD stays under bearish pressure and trades at its weakest level in nearly two years below 1.0400. The data from Germany and the Eurozone showed that the business activity in the private sector contracted in early November, weighing on the Euro.

EUR/USD News
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as market focus shift to US PMI data releases.

GBP/USD News
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.

Gold News
S&P Global PMIs set to signal US economy continued to expand in November

S&P Global PMIs set to signal US economy continued to expand in November

The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures