Gold Price Forecast: XAU/USD steadily climbs to $1,750 level amid broad-based USD weakness
- Gold price catches fresh bids and snaps a four-day losing streak amid renewed US Dollar selling bias.
- Bets for smaller rate hikes by the Federal Reserve weigh on the US Treasury bond yields and the USD.
- A positive risk tone might turn out to be the only factor that could cap further upside for Gold price.
- Traders now await the November FOMC meeting minutes on Wednesday for a fresh directional impetus.
Gold price regains some positive traction on Tuesday and snaps a four-day losing streak to a one-and-half-week low touched the previous day. The XAU/USD sticks to gains just below the $1,750 level through the mid-European session and for now, seems to have stalled its recent corrective pullback from a three-month high.
Fresh US Dollar selling benefits Gold price
The US Dollar comes under some selling pressure and halts the recent bounce from its lowest level since August 12, which, in turn, is seen boosting the Dollar-denominated gold. Investors seem convinced that the Federal Reserve (Fed) will slow the pace of its rate-hiking cycle and have been pricing in a greater chance of a relatively smaller 50 bps lift-off at the December meeting. This is evident from a modest downtick in the US Treasury bond yields and weighs on the USD.
Hawkish signals by Federal Reserve officials seem to cap gains
That said, the recent hawkish signals from several Fed officials suggest that the US central bank will continue to tighten its monetary policy to combat stubbornly high inflation. This, in turn, should act as a tailwind for the US bond yields and help limit losses for the US Dollar, capping any further gains for the non-yielding Gold price. Hence, the focus will remain on the minutes of the Fed’s November meeting, due on Thursday, which will be looked upon for cues about future rate hikes.
A positive risk tone further warrants caution for XAU/USD bulls
In the meantime, worries about economic headwinds stemming from a new COVID-19 outbreak in China and the imposition of fresh lockdowns could benefit the greenback's status as the global reserve currency. Apart from this, signs of stability in the financial markets might also contribute to capping the upside for the safe-haven XAU/USD. This makes it prudent to wait for strong follow-through buying before traders start positioning for a further appreciating move for Gold price.
Next on tap is the release of the Richmond Manufacturing Index from the US. This, along with a scheduled speech by Cleveland Federal Reserve President Loretta Mester and the US bond yields, will influence the US Dollar price dynamics. Apart from this, traders will take cues from the broader risk sentiment to grab short-term opportunities around the Gold price.
Gold price technical outlook
From a technical perspective, any subsequent move up is likely to confront some resistance near the $1,755 region. A sustained strength beyond might trigger a short-covering rally towards the $1,765 area. The next relevant hurdle is pegged near the $1,770 level, above which Gold price could climb back to retest the multi-month high, around the $1,785 zone touched last week.
On the flip side, the weekly low, around the $1,733-$1,732 region, marks a previous strong resistance breakpoint and should continue to protect the immediate downside. That said, a convincing breakthrough might prompt aggressive technical selling and make the Gold price vulnerable to accelerate the fall to challenge the $1,700 round figure.
Key levels to watch