I have often indicated in the technical analysis of the XAU/USD gold price that the recent bullish rebound gains are sufficient to push the technical indicators towards overbought levels. Additionally, profit-taking sales may occur at any time. For the second day in a row, the XAU/USD gold price is exposed to selling operations, the impact of which moved towards the support level at $1766 an ounce, before settling around the $1775 level at the time of writing.
The XAU/USD gold price rose to its highest level since July as the US dollar weakened, and as investors' appetite revived as China removed some Covid Zero restrictions. Chinese authorities have scrambled to shift towards reopening the world's second-largest economy, with Shanghai and Hangzhou easing some restrictions after protests against the country's strict policies.
Bullion prices have been hit by the sharp increases in US interest rates by the Federal Reserve this year. Recent indications that the US central bank is becoming less hawkish have boosted the price of the metal, pushing it above $1,800 an ounce last week. While the precious metal fell below that level after Friday's US jobs report, bets on China's reopening sent the dollar lower and further supported prices on Monday. The price of gold tends to have a negative correlation with the US dollar and its prices because it does not carry interest and is priced in the US currency.
Commenting on this, Nicholas Vrabel, an analyst at ABC Refinery in Sydney, said that strong US jobs data and wage pressures “helped lower gold,” but the metal “rallied almost immediately and has a ‘buy the dips’ feeling at the moment.”
In general, US dollar exchange rates have declined significantly in the weeks following the release of US inflation data for October in early November, indicating that price pressures in the US may be moderating. Gold's gains were most evident after Federal Reserve Chairman Jerome Powell confirmed that US interest rates are unlikely to rise as quickly as they have in the future, but also warned of continued risks of a potential peak in borrowing costs. He cited wage growth in the labor market and services sector as a major risk to the bank's efforts to bring inflation back to the 2% target and reiterated his earlier view that US data recently argued in favor of higher interest rate hikes than was proposed back in September.
XAU/USD gold price forecast today:
- Despite the selling operations from yesterday, the opportunity for an upward trend for XAU/USD gold price still exists.
- An actual reversal of the trend will not occur, according to the performance on the daily chart below, without gold prices moving towards the support levels 1755 and 1738 dollars, respectively.
- On the other hand, the return of gold price stability above the $1785 resistance is important to expect the psychological resistance $1800 again.
- We still prefer to sell from it and from above that resistance.
- The price of gold will be affected by the level of the US dollar and whether or not investors are willing to take risks.
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