- The price of gold fails to capitalize on the gains recorded in the last two sessions.
- The rebound in US Treasury yields revives demand for the dollar and acts as a headwind.
- Investors are also wary of the Federal Reserve’s rate hike.
The gold price reverses an intraday drop in the $1,780 area and rises to the top of its daily trading range heading into the North American session. XAU/USD is currently sitting just above the $1,785 level, though it lacks bullish conviction and remains below a technically significant 200-day SMA.
Traders await clarity on the Federal Reserve’s rate hike path.
The consolidation sideways move comes amid uncertainty about the path of the Federal Reserve’s rate hikes, which tends to boost the price of gold. Current market prices indicate a more than 90% chance of a relatively minor rate hike of 50 basis points by the US central bank in December. That said, recent positive US macroeconomic data supported the idea of ​​further monetary policy tightening and fueled speculation that the Fed could raise interest rates more than anticipated.
Focus remains on key data/events in the US next week.
Therefore, attention will remain focused on the next Federal Open Market Committee (FOMC) monetary policy meeting, which will be held on December 13-14. Ahead of the key central bank appointment, investors will be guided by the release of the latest US inflation figures. The crucial CPI report plays a key role in influencing the Federal Reserve’s monetary policy outlook. This, in turn, should determine the short-term path of the gold price, which is also considered a hedge against inflation.
The rebound in Treasury yields seems to limit the price of gold
Meanwhile, a nice rebound in US Treasury yields is seen as acting as a tailwind for the Dollar and keeping a cap on the Gold price. Other than this, a generally risky tone Positive, bolstered by optimism over the easing of COVID-19 restrictions in China, helps cap the upside of the safe-haven XAU/USD. The aforementioned factors could curb aggressive bets by traders and support prospects for range-limit extension.
Gold Price Technical Outlook
From a technical point of view, the 200-day SMA, currently around the $1,792-1,793 zone, is likely to act as an immediate hurdle ahead of the psychological zone of $1,800. The next major resistance is near the area of ​​the $1,810, or the multi-month high reached on Monday, above which the price could appreciate further towards the $1,830 barrier. The momentum could take XAU/USD to the offer zone of $1,843-1,845.
On the other hand, the $1,775-1,774 region could protect the immediate fall before the weekly minimum, around the zone of $1,765-1,764. Continuation of selling, with a consequent break below the horizontal resistance at $1,761-1,760, would nullify any short-term positive outlook and shift the bias in favor of bears. The gold price could then become vulnerable and accelerate the decline towards the $1,738-1,737 area, on the way to the $1,725 ​​level.
XAU/USD Technical Levels
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.
