Bullish Pennant on XAUUSD: Are Gold Prices About to Surge?

Gold prices did not see much movement in Friday’s trading. In fact, XAUUSD traded within a tight, 80-cent range after opening at $1,511.89. By the end of the New York session, the precious metal had settled at $1,510.54.

The forex calendar was blank for economic reports from the US. At the same time, we did not hear new updates regarding the US-China phase one deal which has previously sparked volatility on the charts. This could explain why the price action on XAUUSD was muted.

Chicago PMI and Pending Home Sales Due Today

Today could be different with the Chicago PMI and pending home sales reports due from the US. At 2:45 pm GMT, the Chicago PMI report for December is anticipated to show improving business conditions in Chicago with the forecast higher at 48.2 than November’s 46.3 reading. Then at 3:00 pm GMT, pending home sales for November is expected to have been 1.5% higher compared to where they were a year ago.

Worse-than-expected US data could have a bullish effect on gold prices because they wold raise concerns about the health of the US economy. Conversely, positive figures will affirm the Fed’s optimism and will likely be bearish for XAUUSD.

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Gold Price Outlook

On the 4-hour time frame of XAUUSD, we can see that gold prices have consolidated after a drastic upward rally. In fact, the precious metal looks to have formed a bullish pennant. In forex trading, a bullish close above the consolidation could mean that XAUUSD may extend its rally. Keep tabs on Friday’s high at $1,515.03 because a close above this price may mean that gold prices may soon test their September 26 highs around $1,534.74.

On the other hand, a bearish close below Friday’s low at $1,507.11 would invalidate the chart pattern. In fact, it could mean that XAUUSD may trade lower to fill the gap around $1,499.00.More content