• Pfizer and BioNTech have published a report from their laboratory tests, which suggesting that a booster shot of their coronavirus vaccine extends significant protection against the fast-spreading Omicron variant

• On the data front, consumer credit has dropped to 16.9 billion against the forecast of 24.9 billion, weighing on the US dollar 

• A spike in the demand for gold above the 1,782 level could drive an upswing until 1,792 or 1,799.

Gold prices closed at $1,784.60, after placing a high of $1,794.25, and a low of $1,789.15. The gold prices dropped on Wednesday, mainly due to rising US Treasury yields. Investors were cautious about placing strong bids ahead of the US inflation report due on Friday, which limited the decline in the precious metal.

Weaker US Dollar Supports Gold at 1,782

The US Dollar Index, which measures the value of the greenback against a basket of six major currencies, fell to 95.85. This weighed on the greenback, further capping the decline in the gold prices. Meanwhile, the US Treasury Yields, on the benchmark 10-year note, continued their bullish rally, rising to 1.53%, which had a negative impact on gold and dragged its prices even lower.

The Omicron variant is boosting safe-haven appeal 

Pfizer and BioNTech have published a report from their laboratory tests,  suggesting that a booster shot of their coronavirus vaccine will provide significant protection against the fast-spreading Omicron variant. In the market, this news boosted the optimism over the efficacy of vaccines against Omicron and reduced the fears of lockdowns, which put added pressure on the safe-haven yellow metal on Wednesday.

However, the prevailing travel restrictions, which are mainly affecting Europe, due to the increased number of cases, added to the the decline in the prices of the yellow metal. Switzerland is dealing with a record number of coronavirus cases, the United Kingdom has reported about 51,343 new cases, and France has seen an increase in COVID hospitalizations.

Quick economic outlook 

On the data front, at 01:00 GMT, the consumer credit dropped to 16.9B, against the projected 24.9B, weighing on the US dollar. At 20:00 GMT, the JOLTS job openings increased to 11.03 million, exceeding the expected 10.45 million and bolstering the US dollar. The macroeconomic data from the US came in mixed on Wednesday, and it had a subdued effect on the US dollar, which limited the losses in gold.

Investors in gold are keenly awaiting the release of US Consumer Price Index data scheduled for Friday, as it could influence the timeline for the Fed’s tapering of its economic support before the next policy meeting on December 14 & 15. The declining prices of gold, despite the weakness in the US dollar, could be attributed to the rising Treasury yields, because of the bets on reduced stimulus and interest rate hikes, which tend to push government bond yields higher and raise the opportunity cost of holding non-interest-bearing gold.

Gold price forecast – Upward trendline support at $1,782

The XAU/USD is trading at $1,783, having bounced off the support level of $1,782. On the 2-hour timeframe, the precious metal has formed an upward trendline, supporting an uptrend in gold.

Daily Technical levels

Support                     Resistance

1,778.41                     1,792.51

1,772.23                    1,800.43

1,764.31                    1,806.61

Pivot Point:             1,786.33

The precious metal is supported by the 50-day exponential moving average at 1,782. A spike in demand above the 1,782 level could drive an upswing until 1,792 or 1,799. Alternatively, a break below 1,782 would open up further room for selling until the 1,774 level. Good luck!