Despite the US Dollar’s recent recovery, the gold price is still only modestly bid. Bond and equity market declines related to the BOJ support safe-haven gold investment. Reports on China and the world economy cast doubt on the XAU/USD bulls, but a light schedule and festive spirit prevent sellers from entering.
Early on Tuesday morning in Europe, the price of gold (XAU/USD) holds onto modest gains at $1,790 despite the US dollar’s recovery from its intraday low. The market’s rush for risk safety may be the cause.
For a few hours, the Bank of Japan’s (BOJ) unexpected move sent off a wave of risk aversion that drove up bond rates and crushed commodity prices. However, the US Dollar Index tried to battle the Gold sellers after failing to stop the daily loss.
The BOJ has modified its monetary policy despite maintaining the same Yield Curve Control (YCC) tools.
The economic worries about China and the rest of the world might be another factor driving the risk-off attitude. The World Bank’s downgrade of China’s economic predictions and the hawkish activities of the major central banks to control inflation, mainly when recession worries are already present, may be the driving force behind the developments.
S&P 500 Futures and Asia-Pacific markets post losses against this background as the US 10-year Treasury rates increase for the third day to retest the monthly top of around 3.70%, standing at 3.67% at press time.
Now that we have a light schedule, risk triggers are the most important thing for Gold traders to observe. Updates on central banks and news about China and Russia will be key among them.
Technical Evaluation
The short-term Gold upside is constrained by a one-week-old falling resistance line, which was trading at $1,793 at the time of publication.
Therefore, the XAU/USD buyers may seek to break through the $1,793 barrier again. This will emphasize a downward-sloping resistance line from December 5, approaching $1,800 at the latest.
A run-up toward the monthly high close to $1,824 after that cannot be ruled out.
In contrast, retreat movements are difficult until the price of gold rises over a two-week-old rising support line, which is about $1,776 at the time of publication.
The hourly chart of gold
