Gold (XAU/USD) Solidifies Around Key Zone of Technical Support

Golden Week Technical Outlook: Neutral

What Moves Gold Prices?

Gold futures surrendered part of November’s gains after bulls retreated from a key zone of technical resistance last week. As the strong recovery from the October low loses steam, a strong barrier of support and resistance continues to form around the key psychological level of $1,750.

With a dragonfly doji candle forming on the weekly chart suggestive of indecision, XAU/USD could be looking for a fresh catalyst to drive momentum next week.

Gold (XAU/USD) Weekly Chart

Chart prepared by Tammy Da Costa using TradingView

As investors continue to focus on monetary policy and recession risks, next week’s economic agenda could help drive the safe haven’s next move. Although data releases next week include US GDP, ISM and employment, Wednesday’s Core PCE (personal consumption expenditure) print could pose the biggest threat to the yellow metal.

Contractionary Monetary Policy: What is it and How Does it Work?

After the recent FOMC meeting minutes raised the probability of a 50bps rate in December, the preferred measure of inflation of the Federal Reserve (Fed) could indicate whether the pressures correspond to higher interest rates.

DailyFX Economic Calendar

Gold (XAU/USD) Technical Analysis

While gold futures are settling around $1,750, the 23.6% Fibonacci level of the 2008 – 2020 move is located just above $1,756.9. A move higher and a retest of the current monthly high at $1,791.8 could open the door for the 50-week MA (moving average) to provide additional resistance around $1,808.

Gold (XAU/USD) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

If gold prices fail to hold above $1,750, a move below $1,734 and a break of $1,716.8 (78.6% Fib retracement of the 2022 move) could move XAU/USD back to $1,700.

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

Contact and follow Tammy on Twitter: @Tams707