- Gold price gains nearly 1% as market speculates on a Fed pivot, spurred on by a WSJ article.
- US bond yields fell, supporting the price of gold, which rebounded from monthly lows.
- Gold Price Forecast: The downtrend remains intact, although a break above $1,650 would send gold to $1,665.
the price of gold rebounds from monthly lows around $1,617, moving steadily towards the $1,640 region, while US Treasury yields fall following an article published by the Wall Street Journal (WSJ), which mentions that Fed officials are divided on December’s rate hike, since November’s Fed Funds Rate (FFR) hike of 75 basis points is the safest thing to do.
Gold Advances as Fed Officials Debate December Rate Hike
In addition, the WSJ article notes that policymakers are weighing the possibility of raising rates at a slower pace in December, specifically 50 basis points, although fears that it will be perceived as a “pivot of the Fed” could trigger a rally in equities, which the article says is not the case. Instead, Fed officials are adjusting the pace of rate hikes to try to cool inflation. After the article was published, US stocks rose and bond yields fell, giving a boost to the price of gold, which hit a new monthly low earlier in the session.
The US 10-year bond yield is gaining two basis points, and stands at 4,250%, well below the yearly high of 4,338%, a level last seen before the global financial crisis of 2007. Also, US real yields fell from 1,838% to 1,706%, as measured by the yield on 10-year Treasury Inflation-Protected Bonds (TIPS), giving metal holders some breathing room. yellows.
Fed officials reiterated the need for further action as inflation remains high
The absence of US economic data on Friday left market participants tilted toward further comments from the Fed. On Thursday, a series of Fed speakers, including Philadelphia Fed President Patrick Harker and Fed member of the board of the Fed, Lisa Cook, commented that the Fed would have to continue raising rates. Harker commented that he is “disappointed by the lack of progress in reducing inflation”, while adding that he expects rates to be above 4% in 2023.
The dollar index falls like a stone, from 113.94 to 112.90, while speculations of an intervention in the USD/JPY increase, due to the wide trading range that the hourly chart shows.
gold price forecast
The daily chart shows that XAU/USD continues to have a bearish bias, although it remains close to the lows of $1,614.92. The daily Exponential Moving Averages (EMAs) maintain their bearish bias, trading well above the spot price, while the Relative Strength Index (RSI) at 39.86, while pointing higher, remains in bearish territory. Therefore, sellers remain in command, albeit with a respite, as the yellow metal prepares to extend its losses for consecutive weeks. If XAU/USD breaks $1,650, a test of the 20-day EMA is anticipated; otherwise, it will remain exposed to retest the lows of recent years.
Source: Fx Street
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