After gold prices jumped on Tuesday towards the $1833 resistance level, its highest in six months, the XAU/USD gold price returned to stability around the $1800 psychological resistance at the time of writing. Gold prices declined significantly yesterday, coinciding with a broad rise in the price of the dollar, supported by a jump in Treasury bond yields.
The US dollar price touched a one-week high against the yen as a summary of the Bank of Japan's views from its December meeting showed that the decision to widen the trading range for the 10-year Japanese government bond yield does not aim to change the direction of monetary easing. The summary showed that broadening the yield band is not a step towards an exit from monetary easing and the current accommodative stance should be maintained through JGB purchases. Treasury yields rose as investors tried to gauge how much higher the Federal Reserve would need to raise interest rates in its ongoing battle against inflation while also trying to avoid tipping the economy into recession.
Overall, the US economic calendar remains light as the Pending Home Sales report is likely to attract some interest in the New York session. Data on weekly jobless claims and business activity in the Chicago area may attract attention in the coming days.
Pending home sales in the US fell for the sixth month in November to their second lowest level on record, as rising borrowing costs and an uncertain economic outlook kept many potential buyers out of the market. The National Association of Realtors' index of contract signings for previously owned homes fell 4% last month to 73.9, the lowest level outside the pandemic in data going back to 2001, according to a statement. The decline was worse than all estimates in a Bloomberg survey of economists.
The Fed's aggressive tightening campaign to quell inflation will have a massive impact on the housing market in 2022. With borrowing costs nearly twice as high as they were at the start of the year, home sales, and therefore prices, have been falling for months. Consumers rate current home-buying conditions as the worst since the early 1980s, according to a University of Michigan survey. However, mortgage rates have been falling after rising to a two-decade high earlier this year.
XAU/USD gold price forecast today:
- Despite the recent performance, the XAU/USD gold price will remain stable around and above the psychological resistance at $1800 an ounce.
- This is supporting the bulls’ control over the trend.
- If the metal gets positive momentum, it may move towards the resistance levels 1818 and $1835 an ounce again, which is sufficient to push the technical indicators towards overbought levels.
On the other hand, as I mentioned in the technical analysis of the gold price, the move towards the $1775 support level will be important to change the general trend to bearish. I still prefer to sell gold from every level up.
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