(MENAFN- Daily Forex) The US dollar recovered before announcing a package of economic data and important events that contributed to selling the XAU/USD (gold ) price towards the support level of $1740 an ounce. This happened before settling around the level of $1754 at the time of writing the analysis, waiting for any new news.
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The gold market will monitor the course of China's measures to contain the outbreak of the epidemic and at the same time plans to revive the Chinese economy, in addition to the course of tightening the US federal reserve 's policy and the US labor market numbers by the end of the week.
A speech on Wednesday from Federal Reserve Chairman Jerome Powell covers 'the economic outlook, inflation and the labor market' but presents a potential risk for financial markets that celebrated earlier in November with official data indicating that US inflation may now moderate. The Fed would have welcomed such moderation, but it is unlikely to deter the bank from September's plan to raise US interest rates further and keep them at their peak until inflation returns to the 2% target, which it could. It should be clarified again on Wednesday.
Jerome Powell's speech is the main event on Wednesday, but it will be preceded by the release of third-quarter GDP data from the US and followed over the course of Thursday and Friday by the release of the Fed's preferred measure of US inflation and the US Nonfarm Payrolls report for November. The danger is that Fed Governor Powell's speech highlights the Fed's message that it intends to continue trying to return inflation to the 2% target using interest rates even if the economy and labor market show clear signs of deterioration along the way.
Such a message could cause turmoil in financial markets, risk aversion among investors, and losses for gold if it comes at a time when US data warns that interest rates and other factors are beginning to affect the US economy. Friday's payroll report could be a prime candidate for revealing signs of economic stress after corporate earnings numbers released in recent weeks showed that even some of the largest US companies are now laying off workers. This is due to the deteriorating domestic and international economic environment.XAU/USD (gold) Forecast
The bullish trend in XAU/USD (gold) prices is seeing a trend reversal as inflation and interest rate in the US continue to increase. This year has been bearish for gold prices but there is hope for a bullish reversal as the Fed looks to ease as it raises interest rates. Investors can expect gold's bullish trend to continue as the inflation rate continues to remain at a high level while the rise in interest rates may slow.
In the long term and according to the performance of the monthly chart, gold price XAU/USD breached below the double top pattern and entered a bearish movement. And at the moment, there is a sharp bullish reversal that may signal the start of another bullish move. And if gold prices continue the bearish move instead, then $1390-$1430 and $1500-$1550 areas to watch for a bullish reaction.
On the other hand, the XAU/USD (gold) price on the weekly chart remains near the previous upward movement's high. There is no higher high printed on the chart yet which means there is a risk of a bearish reversal. And if gold prices start to fall again, a bearish continuation may occur.
Investors may want to remain cautious for now. According to the performance on the daily chart, the XAU/USD gold price is going through a downward movement after the new higher high on the chart. It is supported at $1,730 or the previous swing high. And if the price can bounce back and move up with a strong upward movement and print a new higher high, then the upward movement may develop into a new bullish trend.
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