Gold Price Forecast XAU/USD – Ready to Challenge Major Resistance at $1771.50 Following Dovish Fed Minutes

Gold futures are up sharply late in the session on Wednesday, reversing earlier weakness after the minutes from the U.S. Federal Reserve’s November policy meeting showed a “substantial majority” of members opting to slow down rate hikes.

At 19:30 GMT, February Comex gold futures are trading $1767.10, up $12.30 or +0.70%. The SPDR Gold Shares ETF (GLD) is at $163.05, up $0.98 or +0.60%.

Given the Fed member remarks the past two weeks, gold traders are dovishly interpreting the minutes which contained no real hawkish surprises.

The news drove Treasury yields sharply lower. Lower rates decrease the opportunity cost of holding non-yielding gold, making it a more attractive asset.

Gold was also boosted by a drop in the U.S. Dollar. A weaker dollar tends to drive up foreign demand for dollar-denominated bullion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on November 15.

A trade through $1806.00 will signal a resumption of the uptrend. A move through $1632.40 will change the main trend to down.

The short-term range is $1632.40 to $1806.00. Its retracement zone at $1719.20 to $1698.70 is support.

The main range is $1910.60 to $1632.40. Its retracement zone at $1771.50 to $1804.30 is resistance. This zone helped put in the top at $1806.00 on November 15.

Daily Swing Chart Technical Forecast

Trader reaction to $1751.60 is likely to determine the direction of the February Comex Gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1751.60 will indicate the presence of buyers. The first upside target is the main 50% level at $1771.50. Overtaking this level will indicate the buying is getting stronger. If this creates enough upside momentum over the near-term then look for the rally to extend into the resistance cluster at $1804.30 – $1806.00.

Bearish Scenario

A sustained move under $1751.60 will signal the presence of sellers. If this generates enough downside momentum then look for a test of the intraday low at $1733.50.

Taking out $1733.50 will indicate the selling pressure is getting stronger. This could trigger a further break into the short-term 50% level at $1719.20, followed by the 61.8% level at $1698.70.

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