Gold Price Forecast: XAU/USD hits a new weekly high on USD weakness

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  • The dollar weakened due to the dovish tone in the minutes of the last Federal Reserve meeting.
  • US global PMIs fell into contractionary territory, putting a headwind for the dollar.
  • According to the University of Michigan Consumer Sentiment Survey, inflation expectations in the United States were unchanged.
  • Gold Price Analysis: In an uptrend, it needs to break above $1,800 to prolong the uptrend.

the price of gold It rose steadily on Thursday amid tight liquidity conditions due to the Thanksgiving holiday in the United States, with Wall Street and the bond market closed. Factors such as the fact that the heads of the Federal Reserve (Fed) have agreed to moderate interest rate rises and a risky environment keep the dollar on the defensive. Therefore, XAU/USD is trading at $1,756 a troy ounce at the time of writing.

Federal Reserve Minutes are a headwind for the US dollar

On Wednesday, the Federal Reserve released its latest minutes, showing that officials are willing to start raising rates to a lesser extent, after raising the FFR by 75 basis points in four times in 2022. Although the minutes are slightly dovish, investors should know that Federal Reserve officials aren’t sure how far rates will go, with most policymakers saying 5% could be the maximum for some participants.

US S&P Global PMI fell into recession territory, causing dollar weakness

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On Wednesday, S&P global PMI releases for the United States showed the economy slowing faster than expected, with manufacturing, services and composites indices all hovering in contraction territory. Chris Williamson, chief economist at S&P Global Market Intelligence, said that “business conditions across the United States worsened in November,” adding that “according to preliminary results from the PMI survey, output and demand fell at increasing rates, which is consistent with the contraction of the economy at an annualized rate of 1%”.

US consumer sentiment remained positive

At the same time, the University of Michigan (UOM) Consumer Sentiment for November, in its final reading, came in at 56.9, above expectations but below the preliminary reading of 59.9. The same report updated Americans’ inflation expectations, with a one-year estimate rising to 4.9%, while the 5-10-year estimate remained unchanged at 3%.

Mixed US economic data put pressure on the dollar

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Earlier in the US economic calendar, last week’s initial jobless claims jumped above expectations, showing that the labor market is easing. At the same time, US durable goods orders for October rose 1%m/m versus estimates of 0.4% as consumer resilience prevented manufacturing activity from slowing.

On top of this, US Treasury yields extended their losses, and the 10-year Treasury yield fell six basis points to 3.70%, a tailwind for the price of gold, which undermines the dollar. Meanwhile, the Dollar Index (DXY), a gauge of the dollar’s value against a basket of rivals, falters 0.36% to 105.705.

Gold Price Analysis (XAU/USD): Technical Perspective

From a daily chart standpoint, XAU/USD has a neutral bias to the upside. However, Gold remains below the 200 day EMA, used as confirmation of the longer-term bullish/bearish bias. Therefore, if XAU buyers want to regain control, they need to break above $1,800, so they can threaten XAU/USD to rally towards the June 17 high of $1,857, ahead of the psychological figure. from $1900. Otherwise, XAU/USD will be exposed to selling pressure, opening the door for a decline towards the 100-day EMA at $1,711.51, ahead of $1,700.

Source: Fx Street

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