Gold hovered above the key $1,800 level over the weekend, ahead of the year-end holiday. The US Dollar weakened and risk interest increased as concerns over the impact of the Omicron coronavirus variant eased. Spot gold rose 0.25% to $1,808 on Thursday with a total weekly gain of 0.52%, silver rose 0.5% to $22.85 with a total weekly gain of 2.3%; Platinum rose 0.8% to $968.20 with a total weekly gain of 4.4% and palladium rose 3.3% to $1,938.45 for a total weekly gain of 9%.
The US dollar index is likely to stabilize due to holidays, which tends to make gold prices move in a limited range and reduce its attractiveness, but the persistent high inflation rate may give a different story. The Greenback is near weekly lows and its recent weakness helped gold stay on track for a small weekly gain.
Gold faces technical resistance at $1,814 and $1,834 , however geopolitical risk ahead could potentially keep gold under pressure. Markets will be watching developments surrounding Russia’s standoff with Western powers over Ukraine.
Earlier this month, the US Federal Reserve signaled its inflation target had been met and paved the way for a three-quarter percentage point rate hike by the end of 2022. Although physical gold is considered a hedge against inflation, rising interest rates will result in higher opportunity costs to hold gold that do not provide yields.
XAUUSD,H4
The intraday bias is seen to be neutral around the round number level of 1,800, with last week’s movements limited below the minor resistance of 1,814. Selling pressure has eased after a rebound of 1,753.46 broke the bearish structure of the resistance break of 1,793.02 and recorded a balanced price at a minor peak of 1,814.19. The price is currently sitting above the EMA 200 after bouncing off 1,784.79 (50.0% FR). Movement of the asset above resistance could confirm a continued rebound to 1,830.00 (61.8% FR) and 1,834.00. As long as the minor resistance persists, the asset will likely consolidate.
Overall, asset prices tend to be more toward confirmed consolidation in the form of a lean monthly body candle.
Related article: XAUUSD : 2022 Gold Prospect
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Ady Phangestu
Market Analyst
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