XAU/USD surges towards $1,760 as Fed seeks to halt larger rate hike culture

XAU/USD surges towards $1,760 as Fed seeks to halt larger rate hike culture
XAU/USD surges towards $1,760 as Fed seeks to halt larger rate hike culture
  • The price of gold is heading towards $1,760.00 as the Fed is about to exit the 75 basis point rate hike regime.
  • The US Dollar is likely to decline to a three-month low of 105.34 in a bullish market.
  • Economists at ANZ Bank consider gold’s rally to be overdone as the inflation rate is well above the 2% target.

The price of gold (XAU/USD) attempted a recovery after falling to near $1,754.00 at the start of the Tokyo session. The precious metal remained sideways on Thursday due to lower volume as US markets were closed due to Thanksgiving Day. Given the optimism of the overall market, the price of gold should continue its advance towards the crucial hurdle of $1,760.00.

The USD Index (DXY) posted back and forth moves below the round resistance at 106.00. The US Dollar is likely to test a three-month low at 105.34 as the Federal Reserve (Fed) prepares to abandon the culture of rate hikes at its December monetary policy meeting. Meanwhile, S&P500 futures added gains during the holiday session amid bullish market sentiment.

The Federal Open Market Committee (FOMC) minutes clarified that the majority of Fed policymakers favor decelerating the current pace of interest rate hikes. This can keep gold prices in a comfort zone. However, ANZ Bank shares a contrary view on this. They believe weaker-than-expected US inflation triggered a selloff in the US dollar, helping gold prices recover. This is unlikely to last as inflation at 7.7% is well above the central bank’s 2% target. “It’s not enough for the Fed to be confident that inflation is on track to return to 2% sustainably.

Gold technical analysis

On an hourly timescale, the price of gold showed a strong rally after testing the 38.2% Fibonacci retracement (drawn from the November 3 low at $1,616.69 to the November 15 high at 1 $758.88) to $1,722.00. The precious metal is looking for support around the 20-period exponential moving average (EMA) at $1,754.65.

Meanwhile, the Relative Strength Index (RSI) (14) is falling in the 40.00-60.00 range indicating that the price of gold is losing its bullish momentum. However, it does not claim a bearish reversal.

Gold hourly chart

. XAU USD progress to so fed seek put term a culture rise rates significant

. XAUUSD surges Fed seeks halt larger rate hike culture

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