Gold price has moved sideways during the thanksgiving weekend as investors look for the next catalyst. It was trading at $1,750, where it has been in the past few days. This price was slightly above this month’s low of $1,725 and 9.28% above its lowest level this month. Other metals like silver and platinum have been stuck in a range as well.
US GDP data ahead
Gold price has been in consolidation as investors focus on the changing tune by the Federal Reserve. Last week, minutes by the FOMC showed that most members of the FOMC expect that the Fed will slow its rate hikes in the coming meeting. As such, most analysts expect that the bank will increase its rates by 0.50% in December, down from the previous 4 increases of 0.75%.
Economists also expect that the Federal Reserve will dramatically slow or even pause rate hikes in 2023. This explains why the US dollar index has slumped from the year-to-date high of $115 to about $106. Historically, gold tends to have an inverse relationship with the US dollar.
Meanwhile, gold price has wavered as America’s bond yields have pulled back. The 10-year bond yield has dropped from the year-to-date high of 4.2% to the current 3.65%. Similarly, the 30-year and 2-year bond yields have fallen to 3.77% and 4.4%, respectively. This price action is because of expectations of a dovish Fed.
Further data shows that some countries are buying a substantial amount of gold. The Turkish central bank increased its gold holdings by 31.17 tonnes in the third quarter. It was followed by Uzbekistan, India, Qatar, and Mozambique. Only Kazakhstan and United Arab Emirates (UAE) reduced their gold holdings significantly during the quarter. In total, the US, Germany, France, Russia, China, and Switzerland have the biggest gold reserves in the world.
Gold price forecast
The XAU/USD price made a strong recovery this month after the US published encouraging inflation data. It rose to a high of $1,786, which was the highest level since August. As it rose, gold managed to move above the important resistance point at $1,730, the highest point in October. It has now formed a break and retest pattern by retesting that level.
Gold has moved to the 25-day and 50-day moving averages while the Relative Strength Index (RSI) moved to the neutral point.
Therefore, at this stage, the outlook of gold prices is neutral with a bullish bias. More upside will be confirmed if the price moves above the resistance point at $1,760. If this happens, the coin will likely rise to $1,785. A drop below the support at $1,740 will invalidate the bullish view.
