Market news

21 December 2021

Gold Price Forecast: XAU/USD flirts with 200/100-DMAs confluence, just below $1,800

  • Omicron fears, weaker USD assisted gold to gain some positive traction on Tuesday.
  • The Fed's hawkish outlook, rising US bond yields capped gains amid the risk-on mood.
  • Relatively thin liquidity warrants some caution before placing aggressive directional bets.

Gold regained positive traction on Tuesday and reversed a major part of the previous day's losses, stalling its recent pullback from the $1,814-15 resistance zone or monthly high touched last week. The XAU/USD maintained its bid tone through the mid-European session, with bulls awaiting a sustained move back above the 200/100-day SMAs confluence hurdle near the $1,800 mark.

The precious metal drew some haven flows amid concerns about surging Omicron COVID-19 variant cases and a fatal blow to US President Joe Biden's massive $1.75 trillion spending bill. In fact, US Senator Joe Manchin, a conservative Democrat who is key to Biden’s hopes of passing the investment bill, said on Sunday that he would not support the package. The developments dashed hopes of a definitive vote before the end of the year, which, in turn, kept the US dollar bulls on the defensive and further benefitted the dollar-denominated gold.

Meanwhile, the global risk sentiment stabilized after Moderna said on Monday that a booster shot of its COVID-19 vaccine could protect against the new strain in laboratory testing. This led to a strong recovery in the global equity markets and held back traders from placing aggressive bullish bets around the safe-haven XAU/USD. Apart from this, the Fed's hawkish outlook and a fresh leg up in the US Treasury bond yields kept a lid on any further gains for the non-yielding gold, warranting some caution for aggressive bullish traders.

It is worth recalling that the Fed announced last Wednesday that it would double the pace of tapering to $30 billion per month. Moreover, the so-called dot plot indicated that officials expect to raise the fed funds rate at least three times next year. Investors might also be reluctant amid relatively thin liquidity conditions heading into the year-end holiday season. This makes it prudent to wait for a strong follow-through buying before positioning for any further gains amid absent relevant market moving economic releases from the US.

Technical outlook

From a technical perspective, any subsequent move beyond the $1,800 confluence might continue to face stiff resistance near the $1,814 region. Some follow-through buying might trigger a short-covering move and push gold prices back towards the $1,832-34 heavy supply zone. On the flip side, the $1,779-78 area now seems to protect the immediate downside. This is followed by support near the $1,772 horizontal level, below which the XAU/USD could slide back to the monthly swing low, around the $1,753 region.

Key levels to watch

 

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