Gold futures rose above the $1,800 psychological resistance ahead of the Christmas holidays, giving some cheer to the gold price outlook as 2023 approaches. The metal tried to take advantage of a weak dollar and disappointing economic data.
Can the price of gold test $1,900 next year?
According to the performance, the XAU/USD gold price recorded a weekly jump of 0.1%, which reduces its decline since the beginning of the year 2022 to date to 1.4%. In the same performance, silver prices, the sister commodity to gold, fluctuated at $24 at the end of the week's trading. Silver futures rose to $23.94 an ounce. The price of the white metal will enjoy weekly gains of more than 2%, extending its annual gain to 2.4%. Over the past three months, silver prices have risen by 27%.
It may not be irrational, but gold prices benefited from a drop in the US personal consumption expenditures price index, which fell to 5.8% in November. It may force the US central bank's preferred measure of inflation to start focusing on interest rates to ensure prices are sufficiently low.
The high interest rate environment is bearish for precious metals because it raises the opportunity cost of holding non-yielding bullion.
Meanwhile, the US Dollar Index (DXY), a measure of the greenback's performance against a basket of other major currencies, fell to 104.31, from an opening of 104.39. Although the exchange rate has stabilized in recent weeks, the index is far from a 20-year high of 114.78. The DXY will record a weekly decline of 0.4%, trimming its YTD gain of 2022 to 8.7%.
A weaker US dollar is beneficial for dollar-denominated commodities because it makes it cheaper for foreign investors to buy them. At the same time, market analysts say that recession fears may also support the price of the yellow metal. According to experts, “We believe that some of the rise in gold prices reflects strong physical demand and/or concerns about an impending recession. Regardless, we think the rally will fade and rates will fall again in early 2023 as the Fed continues to raise interest rates. ”
Economic Outlook
US durable goods orders fell 2.1% in November, while personal spending and personal income declined from October to November. However, the University of Michigan Consumer Sentiment Index rose to 59.7 in December.
In other metals markets, copper futures rose to $3,814 a pound. Platinum futures rose to $1,030.00 an ounce. Palladium futures rose to $1,746.50 an ounce.
Technical outlook for XAU/USD gold prices today:
- It appears that the XAU / USD gold price is trading within a bullish channel formation.
- This indicates a significant short-term bullish momentum in market sentiment.
- Therefore, the bulls will target extended gains at around $1802 or higher at $1808 an ounce.
- On the other hand, the bears will target potential pullback profits around $1,792 or lower at $1,786 an ounce.
On the long term, and according to the performance on the daily chart, it appears that the XAU / USD gold price is trading within a bullish channel formation. This indicates a significant bullish momentum in the long-term market sentiment. Therefore, the bulls will be looking to extend the current series of gains towards $1818 or higher to $1840 an ounce. On the other hand, bears will look to pounce on gains at around $1,776 or lower at $1,754 an ounce.
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