- The recovery of the US dollar, coinciding with the beginning of trading this important week, allowed the XAU/USD gold price to bounce back to the support level of $1778 an ounce.
- It gave up the gains of the recent bullish rebound to reach the resistance level of $1810 an ounce.
- The price of gold may remain under downward pressure until the market’s reaction to the announcement of US inflation figures today, and then the monetary policy decisions of the US Central Bank this week.
At the beginning of this week's trading, US stocks recorded gains in light of a pivotal week of monetary policy decisions from the Federal Reserve, the European Central Bank and a group of their peers. By performance, the S&P 500 rose 0.7 percent after the Federal Reserve Bank of New York released consumer survey data showing a decline in inflation expectations. The Nasdaq 100 index of heavy technology stocks rose after fluctuating earlier. Treasury yields rose, with the 10-year note rising by about 3.61 percent.
All eyes will be on today's US CPI reading
The reading is expected to show prices, while still elevated, continue to slow. A weak US CPI reading would justify the Fed's expected half-point move on Wednesday and shed light on whether markets can expect US interest rate cuts in late 2023. While US central bank officials signaled a bearish turn, they also emphasized that borrowing costs should remain constrained for some time.
The S&P 500 had its best post-CPI day ever in November after US inflation data came in slower than expected. The US stock index could rise as much as 5.5 percent on Tuesday — which would equal the best day for the consumer price index on record. This if headline US inflation comes in at 0.2 percentage point below estimates on an annual basis, according to analysis from market maker Optiver.
However, disparities in the economic outlook between regions of the world, from the resurgence of COVID in China to energy volatility in Europe, kept a lid on investors' risk sentiment. After the Fed, the European Central Bank will announce its interest rate decision on Thursday, and may also choose to raise 50 basis points. The markets also have to deal with the decisions of the Bank of England and the monetary authorities of Mexico, Norway, the Philippines, Switzerland and Taiwan.
XAU/USD gold price forecast today:
There is no doubt that the XAU/USD gold price’s abandonment of the psychological resistance at $1800 an ounce threatens the future of the current bullish trend. As I mentioned before, the stability of the gold price below the support level at $1775 an ounce will support the bears for further movement downwards. The next support levels may be 1763 and $1750 is the next target for bears' control, and the last level is confirmation of the current bullish outlook. On the other hand, the psychological resistance at $1,800 an ounce will remain an important symbol of bulls controlling the trend.
The price of gold today will be affected by the level of the US dollar and the market’s reaction to the announcement of job and wage numbers in Britain, the German ZEW reading and the US consumer price index.
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