Gold Price Forecast: XAU/USD advances towards $1,815 on falling US yields and weak USD

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  • The price of gold remains above $1,800 in a context of low liquidity.
  • The US job market seems to relax after the increase in initial claims for unemployment benefits.
  • Central Banks around the world increased their Gold holdings in the third quarter by close to 400 metric tons.
  • Gold Price Analysis: Holdings above $1,800 with an eye on the June high of $1,879.45.

The price of gold It advances after hitting a daily low of $1,803.30, gaining 0.83% during the North American session driven by falling US bond yields, which weakened the US dollar (USD). Meanwhile, investor sentiment improved despite China’s loosening of Covid-19 policy keeping pressure on the healthcare system. At the time of writing, XAU/USD was trading at $1,817.27, up 0.74%.

Investor fears ease after worse-than-expected US jobless claims data

Wall Street extends its gains in the penultimate trading day of the year. The US Department of Labor revealed that initial claims for unemployment benefits for the week ending December 24 rose to 225,000, in line with expectations, and 9,000 above the previous week’s record. Continuation requests rose to 1.7 million in the week ending December 17, the highest number since early February.

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Once the report was released, gold prices rose as investor fears of a tightening labor market eased. In addition, US Treasury yields fell, with the yield on the 10-year Treasury slipping five basis points to 3,830%. Consequently, the dollar weakened, as shown by the Dollar Index (DXY), which tracks the evolution of the dollar against a basket of currencies, with a fall of 0.54%, up to 103,901 points.

According to the World Gold Council (WGC), the world’s central banks bought gold at the highest rate since 1967, probably led by the institutions of Russia and China. Central banks bought 399 metric tons of gold in the third quarter, compared to 186 metric tons in the first quarter and 88 metric tons in the second.

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The US economic calendar will end the year with the Chicago PMI on Friday. Next year will start with a very tight schedule, in which the PMIs of S&P Global and ISM, the data of the labor market and the trade balance will be published.

Gold Price Analysis: Technical Perspective

From the daily chart point of view, the XAU/USD pair maintains the bullish trend, although it fails to break the December high of $1,833.29. Traders should note that gold prices have been tracking the 20-day EMA since mid-November, and Gold is trading above its 200-day EMA. Therefore, further increases are expected.

That being said, the first resistance for XAU/USD would be the high at $1,833.29. A break of the latter would expose the June high of $1,879.45, followed by the $1,900 signal. As an alternative scenario, the first support for the XAU/USD would be $1,800. A break below would expose the 20-day EMA at $1,792.78, followed by the 200-day EMA at $1,765.98.

Source: Fx Street

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