Gold Completes 38.2% Fibonacci Retracement – A Quick Trading Plan
- Fed Governor Christopher Waller has hinted at a possible rate hike after March 2022, when the bond tapering will wind up
- CB Leading Index surged to 1.1%, against the forecast of 0.9%, supporting the US dollar
- Gold is consolidating within a narrow trading range of 1,795 to 1,788, and a breakout of this range may determine further trends
Gold prices closed at $1,792.20, after placing a high of $1,804.60, and a low of $1,789.05. Gold reversed its course on Monday and declined, after rising for the previous two sessions. Gold remained under pressure, despite a weaker US dollar, owing primarily to rising US Treasury yields. The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, fell to 96.55 on Monday, whereas the US Treasury Yield, on the benchmark 10-year, note surged to 1.42%, making non-yielding bullion more expensive for holders.
Furthermore, global equities are lower, due to worries over the impact of the Omicron variant and tighter COVID-19 restrictions. However, the precious metal is also down because safe-haven inflows have stalled. Analysts believe that gold is losing its charm as the holidays approach, and traders are no longer participating fully.
Gold Rate Live
Fed Governor Christopher Waller has hinted at a possible rate hike after March 2022, when the bond tapering will wind up. This news sparked risk appetite in the market and weighed on gold, as a US Federal Reserve rate hike would increase the opportunity cost of holding non-interest-bearing gold.
On the data front, at 20:00 GMT, the CB Leading Index came in, indicating a surge to 1.1%, against the forecast of 0.9%, supporting the US dollar, which ultimately added to the declining prices of the precious metal on Monday. The Chinese Foreign Minister, Wang Yi, also outlined the country’s diplomatic priorities for the year to come. He said that Beijing welcomes mutually beneficial cooperation and healthy competition with the United States, but it is not afraid of confrontation.
According to Yi, China’s attitude is consistent and clear. Dialogue should be equal; cooperation should be reciprocal. Competition should be healthy and not harmful. He also said that China is not afraid of confrontation and that it would persist to the end. While the phase-one trade deal between the world’s two largest economies was close to expiring at the end of the year, these comments from China resulted in mixed views about US-China relations. The two financial giants are engaged in frequent trade negotiations at various levels.
According to China, the supply side of the US is upsetting China’s ability to meet the purchasing targets. Moreover, a growing number of countries are reducing the waiting time for COVID-19 vaccine boosters from six months to as few as three, in an effort to control the rising number of infections from the Omicron variant. This reaction was prompted by evidence suggesting that the Omicron variant was spreading faster than its predecessors, such as Delta.
However, some scientists believe that giving booster shots too soon could compromise the level of longer-term vaccine protection. Many studies have shown that the initial two doses of vaccines are not enough to prevent infection with the Omicron variant, but a booster shot might help. And countries have started to give their people booster shots to avoid the rapid spread of variants, even though booster shots are usually only given after six months. This news could have caused a decline in the gold prices by increasing the risk appetite.
Daily Technical Levels
Support Resistance
1,785.96 1,801.51
1,779.73 1,810.83
1,770.41 1,817.06
Pivot Point: 1,795.28
Gold price forecast – A Daily technical outlook
Gold is consolidating within a narrow trading range of 1,795 to 1,788, and a breakout of this range may determine further trends. The closing of candles outside these levels could also signal further direction in the market.
On the 2-hour timeframe, gold has completed a 38.2% Fibonacci retracement at 1,792. Closing of candles below this may extend a selling bias until 1,783 (50%) or 1,776 (61.8%). Stay tuned to FXLeaders trading signals for more updates. Good luck!
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