- Gold begins 2022 on a firmer footing after snapping two-year advances in 2021.
- Risk appetite improves despite surging covid infections, Fed rate-hike concerns.
- US PMIs, FOMC Minutes and NFP are the key for short-term direction.
- Will 2022 be better for gold than 2021?
Update: Gold (XAU/USD) remains depressed around intraday low close to $1,825, down 0.25% intraday during early Monday’s trading.
In doing so, the yellow metal portrays a pullback from a six-week high while also snapping the two-day uptrend.
The metal’s latest weakness could be linked to the US dollar’s bounce from the monthly low amid the escalating fears of the South African covid variant, as well as rising chatters surrounding the US Federal Reserve’s (Fed) faster rate hikes in 2023. Also helping the gold traders to consolidate recent gains is the off in multiple markets and an absence of major data/events. On the same line are the fears emanating from China’s troubled real-estate player Evergrande and geopolitical tension between Russia and Ukraine.
That said, US PMIs for December may offer intermediate direction to gold prices during the week but major attention will be given to FOMC Minutes and Friday US employment figures for December.
End of update.
After a disappointment in 2021, gold (XAU/USD) kick-starts 2022 on a firmer foot around $1,830 during Monday’s Asian session. In doing so, the yellow metal cheers market’s risk-on mood amid a light calendar and off in multiple markets ahead of the key weekly events.
That said, the S&P 500 Futures rise 0.55% while the US Dollar Index (DXY) struggles around a one-month low amid cautiously optimistic markets.
Among the key risk catalysts are the market fears over the South African covid variant versus upbeat studies terming the virus strain as less severe than the previous versions of the COVID-19.
While portraying the covid data, Reuters said, “Worldwide infections hit a record high over the past seven-day period, with an average of just over a million cases detected a day between Dec. 24 and 30.” The news also mentioned, “Over 4,000 flights were canceled around the world on Sunday, more than half of them were the US flights, adding to the toll of holiday week travel disruptions due to adverse weather and the surge in COVID-19 cases.”
On the same line were comments from Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, per CNN stating, “When you have so many, many cases, even if the rate of hospitalization is lower with Omicron than it is with Delta, there's still the danger that you're going to have a surging of hospitalizations that might stress the health care system.”
In addition to the market’s consolidation, an absence of major data/events and off in multiple bourses also underpin the latest corrective pullback in gold prices.
Even so, recently increasing hopes of the Fed’s faster rate-hikes in 2022 and virus woes are likely to challenge gold buyers. For that matter, the Federal Open Market Committee (FOMC) Meeting Minutes and Friday’s US Nonfarm Payrolls (NFP) will be crucial to watch. For intraday, final readings of the US Markit Manufacturing PMI for December may offer immediate directions.
Technical analysis
A clear upside break of a 10-week-old horizontal resistance, near $1,814-16, enabled gold buyers to refresh monthly top on Friday. The run-up gained support from firmer RSI and bullish MACD signals, keeping gold buyers hopeful of late.
However, tops marked in July and September, around $1,834, become a tough nut to crack.
Adding to the upside filters are multiple levels marked near $1,850 and November’s peak of $1,877.
Meanwhile, pullback moves remain less interesting until staying beyond the previous horizontal resistance, now support around $1,816-14.
Following that, the $1,800 threshold will precede 100-DMA level surrounding $1,794 and an ascending support line from August, near $1,782, becomes the key to watch.
Gold: Daily chart
Trend: Further upside expected
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.