- Sentiment turned negative due to weakening Chinese exports and rising recession fears.
- The economic data revealed in the United States justify a greater tightening of the Federal Reserve.
- Gold Price Forecast: Recovers $1,780 and tests $1,800.
The price of gold Rises back above $1,770 amid risk aversion momentum as negative data from China heightens concerns of a global recession, while central banks around the world continue to hike borrowing costs. The latest rounds of economic data released in the United States, which show a resilient economy, increase the pressure on the Federal Reserve (Fed) to act. However, the US dollar (USD) continues to fall, which favors the yellow metal. At the time of writing these lines, the pair XAU/USD It is trading at $1,783, after hitting a low of $1,768.
Chinese exports fall, fueling recession fears
Fall in US stocks, reflecting a state of risk aversion. The data published in the Asian session, according to which Chinese exports plummeted 8.7% year-on-year in November, well below the contraction of 3.5% expected, unleashed pessimism about a further slowdown in the economy, despite the fact that the Chinese authorities eased Covid-19 restrictions.
The US economy continues to resist, puts pressure on the Federal Reserve
The latest data from the United States had shown that the Federal Reserve would have to continue tightening its monetary policy. The fact that the US economy added 263,000 new jobs, as the November Nonfarm Payrolls (NFP) report showed, highlighted the rigidity of the labor market. In addition, Median Hourly Earnings increased 5.1% YoY from 4.9%, adding to inflationary pressures.
Meanwhile, the ISM Non-Manufacturing PMI rose to 56.6, beating forecasts of 53.3, bolstered by the holiday season. According to Bloomberg analysts, “the price subindex confirmed that inflationary momentum in services remains strong despite broader disinflation in the goods sectors.”
The Federal Reserve will digest next week’s PPI, consumer sentiment and CPI
Given the aforementioned background, next week’s Federal Reserve Open Market Committee (FOMC) meeting would be crucial, even though Federal Reserve Chairman Jerome Powell gave the green light for a 50% rate hike. basic points. However, with US data coming up, such as the Producer Price Index, University of Michigan (UoM), and the Consumer Price Index (CPI) for the following week, it would shed some clues on inflation rising or easing.
Gold Price Forecast: XAU/USD Technical Outlook
From a technical standpoint, Gold remains bullish. However, after breaking above $1,800 last Friday, the yellow metal failed to capitalize on broader US dollar weakness as XAU/USD fell below $1,800. The lack of strength from gold buyers is well portrayed by the Relative Strength Index (RSI) posting a series of lower peaks as price action heads higher. In addition, the Rate of Change (TCC) confirms that the buying momentum is fading.
However, Gold was capped around $1,766, and XAU/USD has broken above $1,780 again, with an eye on breaking the November 15 high of $1,786.53. If XAU/USD breaks above this last level, the next resistance will be $1,800. The break above will expose the June 17 daily high at $1,857.20, followed by the June 13 pivot high at $1,879.45.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
