- XAU/USD recovered as the New York session winds down, up 0.85%.
- The US 10-year Treasury yield plunged, down almost ten basis points, finishing the week at 1.358%.
- XAU/USD: A break above $1,792 could propel gold towards $1,800 and beyond.
- Fed’s Bullard commented on the need of the Fed for a faster taper, considering the 4.2% unemployment rate “as a good case to remove Fed support.”
Gold (XAU/USD) climbs as the New York session winds down, up some 0.86%, trading at $1,784 at the time of writing. The market sentiment was downbeat throughout the American session, with US equities ending the day in the red, losing between 0.17% and 2.54%. In the bond market, US bond yields, plummeted leading by 2s down two and a half basis points, sitting at 0.593%, and 10s losing nine basis points at 1.358%.
In the meantime, the US Dollar Index, which tracks the greenback’s value against a basket of six currencies, prints modest gains of 0.02%, up to 96.18, ahead into the weekend. Despite the US dollar rising, US T-bond yields were a headwind for the USD versus gold.
XAU/USD Price Forecast (Update): Technical outlook
Gold’s (XAU/USD) daily chart shows that Friday’s price action is forming a bullish engulfing candle pattern, with an upside implication; nevertheless, a daily close above $1,780 is necessary to confirm its validity.
In that outcome, the first resistance would be the confluence of the 200, 50, and 100-day moving averages (DMA’s) lying at $1,791.01, $1791.41, and $1,790.63, respectively. A breach of the latter could propel gold prices higher due to the importance of the $1,790-92 area. The next resistance would be the $1,800, followed by the September 3 high at $1,834.
Gold (XAU/ÜSD) edges higher during the New York session, up 0.15%, trading at $1,770.35 at the time of writing. Market sentiment is downbeat due partly to a not-so-bad US Nonfarm payrolls report, amid US Bond yields rising, led by 2s up two and a half basis points at 0.646%, 5s higher one basis point at 1.239%, while the 10s are steady at 1.45%.
At press time, the US Dollar Index, which measures the greenback’s value against a basket of its peers, advances 0.13%, sitting at 96.28, a headwind for the yellow metal, which has been struggling in the week, so far down 1.21%.
US Nonfarm payrolls increased lower than foreseen, but Unemployment Rate falls
Apart from that, on Friday, the US Bureau of Labor Statistics (BLS) reported that in November, the US economy added 210K new jobs, versus the 550K expected. Although the headline miss is substantial, it seems to ease investors’ reaction, as the Unemployment Rate for November fell three tenths from 4.5% in October to 4.2%.
The yellow metal whipsawed once the news crossed the wires, reaching a daily high at $1,778, then retreating to $1,766, followed by a consolidation around current levels.
In the meantime, St. Louis Federal Reserve President James Bullard, who has a hawkish stance and would be a voter in 2022, is crossing the wires. Bullard said that the US economy has recovered and is poised to grow. Noted that in the following meetings, the Fed would need to consider a faster QE’s reduction, citing that a 4.2% jobless rate “as a good case to remove Fed support.” Bullard also commented that the US central bank could consider increasing rates before finishing the bond taper.
XAU/USD Price Forecast: Technical outlook
Gold in its daily chart shows some “indecision” and sideways trading. However, it is essential to notice that the 200, 50, and 100-day moving averages (DMA’s) reside above the spot price, lying at $1791.01, $1791.41, and $1,790.63, respectively. The scenario of a death-cross, which means when the 50-DMA crosses below the 200-DMA, usually a bearish signal, could become a reality, thus changing gold bias from a technical analysis point of view.
In the abovementioned outcome, the first support would be the December 3 cycle low at $1,761.99. The breach of the latter would expose crucial support levels, as the October 6 low at $1,745.72, followed by the September 29 low at $1,721.52.