Gold Price Forecast XAUUSD – Rate Hike Fears Erase Earlier Weekly Gains

Gold futures are inching higher on Friday, nonetheless, the market is poised to post its first weekly loss in three as hawkish comments from several Fed officials dampened demand for bullion.

At 07:01 GMT, December Comex gold futures are trading $1766.20, up $3.20 or +0.18%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $163.95, down $1.17 or -0.71%.

After hitting a three-month high earlier in the week, gold prices retreated enough to turn lower for the week as hawkish remarks from Fed officials and strong retail sales put the brakes on a short-covering rally fueled by signs of softening inflation last week.

Strong Dollar, Rate Hike Threats Caps Gains

Gold prices fell 1% on Thursday as the dollar bounced while investors gauged economic cues from the United States for the pace of future interest rate hikes.

Eroding some of gold’s recent advance, data showed U.S. retail sales increased more than expected in October, renewing expectations that the improved economic data could prompt the Federal Reserve to keep hiking rates.

In a further show of economic strength, the number of Americans filing new claims for unemployment benefits fell last week, keeping the labor market tight despite the Fed’s aggressive interest rate hikes to cool demand in the economy.

Finally, the threat of additional rate hikes weighed. While Fed Governor Christopher Waller on Wednesday said he would be “more comfortable” with smaller rate increases going forward, St. Louis Fed President James Bullard stated the central bank needs to continue raising interest rates probably by at least another full percentage point.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has shifted to the downside.

A trade thorough $1791.80 will signal a resumption of the uptrend. A move through $1618.30 will change the main trend to down.

The shift in momentum was triggered by the confirmation of the closing price reversal top on November 15.

The main range is $1824.60 to $1618.30. The market is trading on the strong side of its retracement zone at $1745.80 to $1721.50, making it support. Additional support is a long-term 50% level at $1709.10.

Daily Swing Chart Technical Forecast

Trader reaction to $1774.20 is likely to determine the direction of the December Comex gold futures contract on Friday.

Bearish Scenario

A sustained move under $1774.20 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into $1745.80. If this level fails then look for the selling to possibly extend into a pair of 50% levels at $1721.50 – $1709.10.

Bullish Scenario

A sustained move over $1774.20 will signal the presence of buyers. If this generates enough upside momentum then look for a retest of $1791.80. Taking out this level could trigger an acceleration into the August 10 main top at $1824.60.