XAU / USD remains above the $ 1,800 level

• Gold prices continue to consolidate above $ 1,800 amid reduced liquidity due to the US holiday.
• The formation of a bearish flag could encourage gold bears, but expectations of easing from the central bank could keep them at bay.

The price of oro (XAU / USD) continues to rise gradually for the second day. Precious metal bounced off the support of the $ 1,800 psychological level on Tuesday, after the sharp drop at the beginning of the week that saw spot prices fall from the $ 1,880 zone. As it is, gold prices remain stable just above the $ 1,810 level.

Central bank easing could keep gold bears at bay

This morning’s minutes of the ECB contained little new information on the ECB’s monetary policy stance, and further easing is expected in the form of adjustments to the PEPP and TLTRO in December. However, along with Wednesday’s FOMC minutes, they served as a reminder that more stimuli from the two central banks are coming.

This should keep real interest rates low for the foreseeable future, especially when inflation starts to pick up in 2021. This should support gold going forward, although of course Any unexpected positive surprises regarding vaccines or US fiscal stimulus could trigger a further drop in the yellow metal.

In the long term, as global central banks increasingly look to 1) let inflation accelerate more than they did over the past decade and 2) look toward a move toward non-traditional digital currencies, these themes will make it difficult to predict when a high has been set in gold.

Unlikely decisive moves before December

Trading volumes are minimal on Thursday, given the lack of US participants in the market due to the Thanksgiving holiday. Friday and next Monday are also likely to be quieter than usual, given a much higher proportion of US participants enjoying a longer weekend than usual.

Therefore, as gold continues to consolidate above $ 1,800 after its rapid move down from 1,880 earlier in the week, the next decisive move, in either direction, will likely have to wait until December.

Gold bears aim to break below the bearish flag, although the 200-day SMA will provide solid support.

Gold prices have gradually risen within the confines of a bearish flag over the past two days, after the sharp drop seen on Monday and early Tuesday.

One move below 1.805$ (XAU / USD is currently trading at $ 1,810) could signal the start of the next downside move, although gold will almost immediately come into contact with stiff support at the 200-day moving average, which comes into play just below the level. psychological of 1.800$. The next support area is around the $ 1,790 level (July 1 high and July 14 low).

However, if the gold bears fail (perhaps as a result of the fundamental argument made earlier about the low real interest rates that support gold prices), then gold prices could see a rapid upward movement in December, without notable levels of resistance before the level of 1.850$.

Technical levels of gold