Gold hesitates with investors awaiting key US data this week

NEW YORK (December 18) Gold (XAU/USD) has opened the week on a mildly positive tone, favoured by a moderate pullback on the US Dollar (USD) and the depressed US bond yields, which remain stuck at mid-term lows.

The precious metal, which is hovering right above $2,020 remains buoyed by increasing hopes that the global tightening cycle has come to an end. The effect of hawkish comments by Federal Reserve (Fed) officials on Friday, downplaying monetary easing hopes, has been short-lived and the USD is drifting lower again at the week’s opening,

Investors are now looking for more cues about the timing of the central bank’s first rate cuts, with their eyes on the US Q3 GDP figures, due on Thursday, and Friday’s US Personal Consumption Expenditures (PCE) Prices Index. These releases are likely to boost US Dollar volatility and might help the precious metal to define its near-term direction.

Daily Digest Market Movers: Gold consolidates with investors awaiting key US data

• Gold prices are looking for direction above the $2,000 psychological level, with the US Dollar still weighed by hopes of Fed cuts in early 2024.
   
• New York Federal Reserve President John Williams dismissed the idea that the Fed has started to consider rate cuts and left the door open for further monetary tightening if needed.
• Later on, Raphael Bostic, Atlanta Fed President and CEO, sided with his colleague, pushing back options of rate cuts until the second half of 2024.
   
• Investors, however, remain confident that the Fed will start rolling back its restrictive monetary policies somewhat earlier. Futures markets are pricing a 67% chance of a 25 basis points (bps) cut in March.
   
• Data from the Eurozone has shown that German business confidence deteriorated against expectations of an improvement in December, which strengthens the case of an economic slowdown anticipated by last week’s downbeat PMI figures.

Technical Analysis: Gold hesitates above $2,020 with broader bullish trend intact

The technical picture shows the precious metal supported above $2,000, yet intraday charts show a lack of clear direction, with the hourly and 4-hour RSIs practically flat near the 50 midline.

Bulls are missing confidence to attempt a retest to previous highs at $2,040 in a calm trading session on Monday, with investors awaiting more data to place significant bets. The broader trend, however, remains positive from the early October lows near $1,800. 

On the upside, the precious metal should breach the $2,040-$2,050 to convince bulls and extend towards the $2,065 area ahead of the all-time high at $2,150.

On the downside, Gold has important support at the $2,015-$2,020 area, where the confluence of the 50 and 100 SMAs in 4-hour charts meet the 50% Fibonacci Retracement of the October-December rally. Below here, bearish pressure would increase with the $1,977 support area coming into play.

FXStreet