The weakness of the US dollar continues to support the strong upward rebound of the gold price XAU/USD, with it holding on to the psychological resistance level of $2,000 per ounce. It seems that the gold price may end trading in 2023 on an upward trend, and during trading in the current month. Recently, it jumped to an all-time high of $2,140 per ounce before stabilizing around the resistance level of $2,053 per ounce at the time of writing the analysis. Therefore, the gold market remained bullish as the popularity of betting against the US dollar increases. Specially, after the US Federal Reserve turned the markets upside down when it signalled the end of its campaign of tightening monetary policy.
Non-commercial traders (a group that includes hedge funds, asset managers, and other market speculators) boosted their bearish bets on the dollar in the week ending Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) compiled by Bloomberg. Recently, the data shows that more than 39,000 contracts are now linked to expectations of a decline in the US currency, up more than 10,000 contracts from last week when the Federal Reserve was preparing for its meeting.
Clearly, US Dollar suffered a sharp decline in the wake of this conference, when the US Federal Reserve issued updated economic forecasts predicting additional monetary easing next year. Moreover, this sent the Bloomberg Dollar Spot Index to its lowest level since July, down more than 2% year-to-date in 2023, and on track for its worst annual performance since 2020. In fact, while there are now more contracts You bet on a weak dollar, the value of the dollar These contracts have fallen to $5.5 billion, slightly less than last week.
In general, the price of the US dollar continued to decline on Friday after the US Federal Reserve's preferred measure of core inflation showed slight gains in prices. Furthermore, that’s confirming the US central bank's shift towards lowering interest rates next year.
Also, according to Forex currency market trading, the price of the Swiss franc rose to its strongest level against the US currency since 2015, while the euro and the Norwegian krone rose to their highest levels since August. Recently, demand for options that pay out if the US dollar rises to the lowest level since June has fallen versus those that pay out if the greenback weakens, according to the one-year risk reversion index, pointing to further weakness next year.
Gold Price Forecast and Analysis Today:
In the context of the holiday season and the absence of market movements, the price of gold XAU/USD remains stable. Obviously, XAU/USD maintaining the gains of the recent upward rebound as long as it remains above the psychological resistance level of $2,000 per ounce. Technically, with the continued weakness of the US dollar, it could continue to break higher levels, with the closest ones currently being $2,055, $2,070, and $2,085, respectively. Also, these levels are enough to push all technical indicators towards strong overbought levels. As a result, profit-taking sales are expected at any time after that. On the other hand, according to the performance on the daily chart below, the downward shift of the gold price XAU/USD requires moving towards the support level of $1,985 per ounce.
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