To kick off the new week, XAU/USD, the price of gold measured in US dollars, hovered around $4,300. Leading up to the announcement the price stayed stable with little fluctuation during the day. As markets opened, gold struggled to maintain this crucial support level amidst a cautious atmosphere driven by upcoming economic indicators and monetary policy announcements from multiple central banks.
In the early part of the trading day, XAU/USD rallied hard and threatened to continue rallying above $4,300. The intraday peak of $4,350 immediately became a key resistance level. Currently, traders have their eyes set on the all-time high around the $4,380 price level. This repulsion suggests that gold price is in for a long and arduous pipeline in the future. Even with all this, gold has done great holding steady topside all moving averages.
The technical indicators for XAU/USD are equally bullish and bearish. The 20-period Simple Moving Average (SMA) crossed above the 100- and 200-period SMAs, suggesting a somewhat bullish trend. At this moment the 20-period SMA offers a dynamic support at $4,280. This serves as the last defense against potential catastrophic price declines. Moreover, while the Momentum indicator has done a steep dive, it’s still above its midline, indicating some strength underneath the surface.
The Relative Strength Index (RSI) sits at 55. It’s trending lower, a bearish indication that the market is losing its upward momentum. They’re monitoring closely as XAU/USD looks poised to continue its near-term downward correction on trend. The 20-day SMA at $4,183.50 provides more dynamic support that could be crucial if prices pull back further.
Earlier in the day, XAU/USD experienced a big pickup in short-term buying interest. This second stimulus largely developed as the US Dollar (USD) showed a consistent run of weakness. Against a wider market wariness, this demand gave a real shot in the arm. Recent headlines have pointed to a growing opposition to Kevin Hassett’s possible appointment as Federal Reserve Chair. This pushback has mainly served to create a very negative sentiment atmosphere around gold prices.
Market participants are bracing for significant economic releases this week, including the November Nonfarm Payrolls (NFP) report and the Consumer Price Index (CPI) update. These as-yet released first-tier economic indicators are poised to have a significant impact on market sentiment and possibly usher in even greater gold price volatility.
This week, the world’s focus will be on several other central banks that will make monetary policy decisions. The European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ) are all scheduled to make particularly interesting announcements. Collectively, these developments will probably raise market expectations. Second, they could do this directly by crashing gold prices and the greater financial markets.