- The Gold price is back in line with the coil and would be expected to continue higher or at least stay sideways.
- Failing this, then an even deeper move in Gold price would be on the cards for the days ahead with $1,775 eyed.
As per the prior day's analysis, Gold Price Forecast: XAU/USD bulls need to commit at key trendline support, the Gold price has found demand at the said support area and has moved back into line with the broader bullish trend. Gold price edged up on Friday ahead of the Christmas holidays and long weekend and was supported by cooling inflation data in Friday's data storm.
US consumer spending glided 0.1% higher in November after climbing 0.4% in October, in a sign that inflation is cooling, although not as much as markets need to see to start to expect a pivot from the Federal Reserve or a slowdown in their rate-hike path. Year-over-year, (YoY), the Personal consumption expenditures index, (PCE), landed at 5.5%, a half-percent cool-down from October. Stripping away volatile food and energy prices, the index was up on monthly and annual bases by 0.2% and 4.7%, respectively, in-line with consensus. The bad news for Gold price is that the October PCE inflation data was upwardly revised.
US Gross Domestic Product data on Thursday and Jobless Claims also highlighted the country's economy rebounded faster than previously estimated and that the jobs market remains very tight. All in all, the slew of data does little to turn the tables with regard to speculation that the Fed will stay the course to fight inflation in 2023. Such rate hikes to tame price pressure weigh on the non-yielding asset that pays no interest which is now on track for a second consecutive yearly decline.
Fed will have to do more
Analysts at Brown Brothers Harriman said markets still don't believe the Fed. ''After rising as high as 5.5% after the most recent FOMC meeting, the terminal rate as seen by the swaps market has fallen back to around 5.0%,'' the analysts explained. ''Similarly, WIRP suggests a 50 bp hike February 1 is only 33% priced in, followed by a final 25 bp hike March 22. We cannot understand why the markets continue to fight the Fed. With the exception of some communications missteps here and there, chair Jerome Powell and company have been resolute about the need to take rates higher for longer. Recent US data confirm that the labor market remains strong and that the Fed will have to do more.''
Gold price technical analysis
In the prior analysis, the Gold price dropped to the targetted area and exceeded it into the $1,784s for a 300% measured move and to where the prior micro trend started off at:
It was stated that a correction in the Gold price would be expected, respecting the bullish trend:
Gold price update
The Gold price is back in line with the coil and would be expected to continue higher or at least stay sideways. Failing this, then an even deeper move in Gold price would be on the cards for the days ahead, making the case for a significant downside correction with $1,775 eyed.
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 recovers from two-year lows, stays below 1.0450
EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
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 investors await US PMI data releases.
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.
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.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.