Market news

16 December 2021

Gold Price Forecast: Bearish RSI divergence tests XAU/USD rebound below $1,800, ECB eyed

  • Gold holds post-Fed rebound from two-month low, sluggish of late.
  • Fed’s faster tapering, hawkish dot-plot failed to supersede Omicron fears, indecision over rate hike timing.
  • ECB is likely to signal PEPP conclusion but economic forecasts are the key.
  • Gold Price Forecast: Lower lows at sight

Gold (XAU/USD) prices grind higher around $1,780, keeping post-Fed rebound from $1,753 during Thursday’s Asian session.

The yellow metal initially reacted to the US Federal Reserve (Fed) decision with a downside to multi-day low before the details triggered the ‘buy the rumor sell the fact’ move. Adding to the corrective pullback could be the market’s preparation for today’s European Central Bank (ECB) meeting and the year-end consolidation in gold prices.

Fed matched wide marked forecasts by doubling trimming the monthly bond purchases by $30 billion and the dot-plot also mentioned three rate hikes in 2022. However, Powell’s comments like “the Omicron variant poses risks to the outlook”, as well as refrain from rate hikes until the tapering is completed, recalled the gold buyers. It’s worth noting that stimulus hopes from the US and a run-up in the equities also helped the corrective pullback.

However, the markets remain divided as the US Treasury yields and the stock futures remain mostly steady ahead of the key ECB monetary policy meeting. That said, the regional central bank is up for closing the Pandemic Emergency Purchase Program (PEPP) but questions over Asset Purchase Program (APP) and economic forecasts will be crucial for the pair traders to watch for fresh impulse.

Read: European Central Bank Preview: More recalibration or actual tightening?

In addition to the ECB, preliminary readings of the monthly PMIs and Omicron updates will also be watched for additional clarity of the gold trades.

Technical analysis

Although RSI rebound and failures to stay below a six-week-old support line defends XAU/USD bulls, the bearish divergence of the RSI and price momentum hints at the commodity’s pullback moves.

The RSI divergence can be identified when the RSI line disagrees with the price moves. In our case of bearish RSI divergence, the prices did make higher highs during December 08 and 13 but the RSI formed lower highs, suggesting a pullback.

That said, the stated immediate support line near $1,763 and the recent low near $1,753 can entertain intraday gold sellers before directing them to September’s low near $1,722.

Alternatively, 100-SMA and descending trend line from November 26, respectively near $1,783 and $1,787, restricts short-term advances of the commodity prices.

Following that, the $1,800 threshold and 200-SMA level near $1,807 will test the gold buyers before giving them controls.

Gold: Four-hour chart

Trend: Further weakness expected

 

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location