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Gold Outlook: XAU/USD Finds Support at Key Technical Level

Gold Outlook: XAU/USD Finds Support at Key Technical Level

Tammy Da Costa, Analyst

Gold Outlook: Neutral

  • Gold (XAU/USD) remains supported below critical resistance of $1,800
  • Evergrande sends jitters through China’s property markets, gold holds firm
  • Inflation comes in line with expectations, gold traders focus on FOMC

Gold Prices

Although the combination of higher inflation data and rising geopolitical tensions continue to weigh on risk sentiment, Gold prices have continued to remain under pressure, below key Fibonacci levels of historical moves of prominence.

After the release of the US CPI data earlier today, gold prices edged higher temporarily before finding support below the key psychological level of $1,800. However, Michigan sentiment figures came in above expectations, hindering further bullish moves.

Gold Outlook: XAU/USD Finds Support at Key Technical Level

DailyFX Economic Calendar

Despite having a reputation as a hedge against inflation, gold prices have succumbed to the pressures of risk sentiment which continues to weigh on precious metals.

Gold Price Analysis:

As talks of inflation remain at the forefront of risk sentiment, a break above trendline resistance on the weekly time-frame has lifted gold prices above the 61.8% Fibonacci retracement level of $1,851, currently holding at support.

While the CCI (commodity channel index) remains within range (at least for now), inflationary pressures may continue to support the upward trajectory for the short-term move.

Gold Weekly Chart

Gold Outlook: XAU/USD Finds Support at Key Technical Level

Chart prepared by Tammy Da Costa using TradingView

Meanwhile, with the release of both the November inflation data and the December Michigan sentiment report, Gold prices have remained supported at around $1,785, the 38.2% Fibonacci retracement of the 2021 move.

For the week ahead, traders will likely remain focused on the upcoming FOMC meeting for signs of additional tapering which could further assist in the catalyzation of Gold and Silver prices.

Gold Daily Chart

Gold Outlook: XAU/USD Finds Support at Key Technical Level

Chart prepared by Tammy Da Costa using TradingView

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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