Gold Price Forecast: XAU/USD aims to extend gains beyond $2,050.00

XAU/USD Current price: 2,041.64

• US Treasury yields continue to retreat, with the 10-year note offering its lowest since July.
• Focus remains on the US Core Personal Consumption Expenditures (PCE) Price Index.
• XAU/USD advances towards $2,050 with room to extend gains beyond the level.

Gold trades with a better tone on Tuesday, helped by the broad US Dollar’s weakness. XAU/USD changes hands around $2,0403, approaching the high posted last week at $2,047.90. The positive tone of equities reflects persistent risk appetite, undermining demand for the American currency. Wall Street extends weekly gains, with the Nasdaq Composite reaching record highs for a third consecutive session, in line with central banks-inspired relief.

Adding pressure on the USD, Treasury yields resumed their slides. The 10-year government bond offers 3.90% at the time being, its lowest since late in July, while the 2-year note yields 4.43%, holding near the multi-month low posted last week at  4.28% and down 2 basis points (bps) on the day.

The United States (US) macroeconomic calendar had little to offer. The country unveiled November Building Permits, which declined by 2.5% MoM and Housing Starts, which rose 14.8% in the same month. Speculative interest awaits the US Federal Reserve’s (Fed) favorite inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, to be released on Friday.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair maintains the risk skewed to the upside. The pair met buyers on an intraday retracement at around a bullish 20 Simple Moving Average (SMA) while the longer moving averages tick modestly higher, far below the shorter one. At the same time, technical indicators post modest intraday advances, although the Momentum indicator remains within neutral levels.

XAU/USD is also bullish in the near term. The 4-hour chart shows a flat 100 SMA offered intraday support, while the 20 SMA gains upward traction above the longer one. Finally, technical indicators head north, with the Relative Strength Index (RSI) indicator at around 64 and the Momentum indicator piercing its midline. Overall, XAU/USD is foreseen to advance at a slow pace, as there is no soon-to-come catalyst that could trigger a bullish breakout.

Support levels: 2,027.60 2,014.10 2,003.90  

Resistance levels:  2,047.90 2,065.60 2,076.10