Gold Price Forecast: XAU/USD bulls eye $1,787 ahead of Federal Reserve’s favored inflation number


  • Gold price grinds higher after posting the biggest daily jump in three weeks.
  • Federal Reserve Chairman Jerome Powell’s dovish commentary, United States data favored XAU/USD buyers.
  • US Dollar dropped as Powell confirmed Fed’s slower interest rate hikes from December.
  • Optimism surrounding China, likely weakness in US data tease Gold buyers towards refreshing monthly high.

Gold price (XAU/USD) begins December on a firmer footing around $1,768, after posting the biggest monthly gains in 29 months during November. That said, the yellow metal’s latest run-up could be linked to the dovish comments from Federal Reserve (Fed) Chairman Jerome Powell, as well as optimism surrounding China. However, buyers seem to take a breather ahead of the Fed’s preferred inflation gauge, namely the United States Core Personal Consumption Expenditure (PCE) Price Index for October.

Federal Reserve Chairman Jerome Powell drowned US Dollar, pumped Gold price

On Wednesday, Fed Chair Jerome Powell marked his first public appearance after November’s Federal Open Market Committee (FOMC) meeting while speaking at the Brookings Institute on the economic outlook, inflation and employment. The policymaker stated that it makes sense to moderate the pace of interest rate increases while also suggesting that the time to slow the pace of rate hikes could come as soon as the next meeting in December.

Ahead of him, Federal Reserve member of the Board of Governors Lisa D. Cook also spoke and praised the inflation data to signal that the Fed would likely take smaller steps as it moves forward.

Following Powell’s speech, the market’s wagers favoring a 50 basis points (bps) rate hike from the Federal Reserve in December increased from 69.9% ahead of the speech to above 75%.

With this, the US Dollar Index (DXY) snapped a three-day uptrend while portraying the biggest daily loss in a week, not to forget mentioning the biggest monthly fall in 12 years. It’s worth noting that the Wall Street benchmarks cheered the dovish remarks from Fed Chair while the United States 10-year Treasury bond yields reversed the early gains to end November on a negative footing around 3.61%.

Given the inverse relationship between the US Dollar and Gold, the metal cheered a slump in the Greenback by crossing the key technical hurdle and luring buyers.

Data from United States also favored XAU/USD bulls

In addition to the dovish comments from the Federal Reserve (Fed) policymakers, downbeat economics from the United States (US) also underpinned the Gold price rally the previous day.

Among them, US ADP Employment Change gained major attention as it marked the lowest readings since January 2021 with a 127K figure for November versus 200K forecast and 239K previous readings. On the same line was the US JOLTS Job Openings for October that eased to 10.334M versus 10.3M expected and 10.687M prior. On the other hand, the second estimate of the US Gross Domestic Product (GDP) Annualized for the third quarter (Q3) marked 2.9% growth versus 2.6% initial forecasts.

China-linked optimism adds strength to Gold price run-up

Considering China’s status as one of the biggest consumers of the Gold, the recent easing in the nation’s daily Covid infections favored the XAU/USD bulls. That said, the Dragon nation reported just around 38,000 daily Coronavirus cases on Tuesday, conveyed on Wednesday, marking the second consecutive day of receding virus numbers after refreshing the record high.

Not only the easy cases but the gradual reliefs in the virus-led activity controls in major cities like Zhengzhou, Guangzhou and Chongqing, also seemed to have favored the Gold price.

United States Core PCE Inflation eyed

Looking forward, US Core PCE Inflation, expected 5.0% YoY in October versus 5.1% prior, will be crucial for immediate Gold price moves as a surprise increase in the inflation numbers could probe the XAU/USD bulls. Also important will be the monthly prints of the US ISM Manufacturing PMI for November, expected 49.8 versus 50.2 prior.

Also read: US October PCE inflation & ISM Manufacturing PMI Preview: Seen through Fed’s eyes

Overall, the Gold price remains on the buyer’s radar ahead of the key US data.

Gold price technical analysis

Gold price remains firmer after confirming further upside momentum by breaking a two-week-old descending trend line, as well as marking repeated bounces off the 100-bar Simple Moving Average (SMA), mostly known as the 100-SMA.

The bullion’s latest run-up also justifies the Moving Average Convergence and Divergence (MACD) indicator’s bullish signals, as well as firmer prints of the Relative Strength Index (RSI) line, placed at 14, which is not overbought.

With this, Gold price run-up towards the monthly high surrounding $1,787 appears imminent.

However, the $1,800 threshold and August month peak near $1,808 could challenge the XAU/USD bulls afterward.

On the flip side, the resistance-turned-support line, around $1,758 by the press time, restricts the immediate downside of the metal before the 100-SMA level surrounding $1,751.

It’s worth noting, however, that the Gold sellers might not risk entries unless witnessing a clear downside break of the one-month-old horizontal support, around $1,730.

Gold price: Four-hour chart

Trend: Further upside expected

Additional important levels

Overview
Today last price 1770.3
Today Daily Change 21.56
Today Daily Change % 1.23%
Today daily open 1748.74
 
Trends
Daily SMA20 1731.33
Daily SMA50 1689.86
Daily SMA100 1712.36
Daily SMA200 1797.44
 
Levels
Previous Daily High 1759.05
Previous Daily Low 1739.82
Previous Weekly High 1761.2
Previous Weekly Low 1721.23
Previous Monthly High 1729.58
Previous Monthly Low 1617.35
Daily Fibonacci 38.2% 1751.7
Daily Fibonacci 61.8% 1747.17
Daily Pivot Point S1 1739.36
Daily Pivot Point S2 1729.97
Daily Pivot Point S3 1720.13
Daily Pivot Point R1 1758.59
Daily Pivot Point R2 1768.43
Daily Pivot Point R3 1777.82

 

 

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 stays near 1.0400 in thin holiday trading

EUR/USD stays near 1.0400 in thin holiday trading

EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.

EUR/USD News
GBP/USD struggles to find direction, holds steady near 1.2550

GBP/USD struggles to find direction, holds steady near 1.2550

GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.

GBP/USD News
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook

Gold holds above $2,600, bulls non-committed on hawkish Fed outlook

Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.

Gold News
IRS says crypto staking should be taxed in response to lawsuit

IRS says crypto staking should be taxed in response to lawsuit

In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.

Read more
2025 outlook: What is next for developed economies and currencies?

2025 outlook: What is next for developed economies and currencies?

As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.

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