XAU/USD Forecast: Gold Prices Rebound As COVID - 19 Fears Take Hold

1. XAU/USD Forecast: Gold Prices
Rebound As COVID-19 Fears Take
Hold

2. Points To Be Discussed Today:
• Gold Cocktail: Inflation, Safe-haven And Tightening
• Gold Could Extend The Current Downward
• Gold Economic Calendar
• Gold Waiting For Buying Opportunities
• Technical Analysis
• Gold Price Attempts To Recover – Analysis

3. Gold Cocktail: Inflation, Safe-haven
And Tightening
• Inflationary pressure (globally) is more sticky
than initially forecasted by many central banks
including the Federal Reserve.
• This plays into the hands of bullion which
tends to outperform in an unrelenting
inflation environment.
• With the festive period coming into its own,
demand is unlikely to abate leaving some
room for gold upside.

4. Gold’s Safe-Haven Appeal
• Earlier this week, spot gold fell on the back of a
stronger dollar and higher U.S. 10-year Treasury yields
(higher opportunity cost of holding gold).
• Sourcing from ‘hawkish’ Fed minutes and strong initial
jobless claims jobs data, the dollar was unrelenting.
• Initially, other safe-haven currencies picked up
momentum (JPY, CHF) as COVID-19 contagion concerns
were being mulled over but Friday’s new variant fears
sparked a more systemic effect.
• Gold’s safe-haven appeal is typically realized when
risks are widespread as opposed to localized – in this
case, unique to Europe until now.

5. Safe-Heaven Assets Comparison

6. Gold Could Extend The Current
Downward
• The Fed’s minutes this week revealed their
openness to complete the tapering process
sooner and begin rate hikes.
• Should this take place, gold could extend the
current downward move but until tapering slows
the backdrop remains supportive for the yellow
metal – high inflation and low real yields.
• Interestingly, the CBOE Gold ETF Volatility Index
(GVZ) which is historically positively correlated to
spot gold has been ticking higher this week while
gold has dipped (prior to the variant scare).

7. CBOE Gold ETF Volatility Index (GVZ):

8. Gold Flow Data
• Gold flow data from the SPDR Gold Shares ETF
has slowed this week (see chart
below) exacerbating the downward pressure
on gold.
• The U.S. Thanksgiving holiday has contributed
to reduced trading volumes and will likely
resume normal activity next week although
today’s data could be noteworthy.

9. Gold Daily Fund Flows

10. Gold Economic Calendar
• Gold market movers next week come from high
impact U.S. economic data (see calendar below)
of which PMI and NFP data are significant.
• Positive PMI and better than expected NFP prints
could intensify the current hawkish slant.
• This being said, a worsening virus circumstances
could hold more influence over gold prices next
week leaving more room for bulls.

11. Gold Economic Calendar - I

12. Gold Waiting For Buying
Opportunities
• For the third consecutive day, gold showed
strong bearish momentum, which pushed it to
the $1782 support level, a 3-week low, before
settling around $1796 as of this writing.
• The strength of the US dollar negatively
affected the price of gold and the strength of
the US currency increased amid expectations
that the Federal Reserve will start raising
interest rates starting in the middle of 2022.

13. Technical Analysis
• According to the performance on the daily chart, the
bulls’ control over the price of gold will not return
without moving above the psychological resistance of
$1800, because it may stimulate buying and push gold
towards stronger resistance levels, the closest of which
are $1819, $1827 and $1845.
• It is enough to push the gold price out of its current
descending channel. On the downside, the closest
support levels for gold are currently $1785, $1770 and
$1755. I still prefer buying gold from every bearish
level.

14. Technical Analysis - I
• The price of gold today may be subject to strong
fluctuation in response to US economic data,
including the growth rate of the gross domestic
product, orders for durable goods, reading the
number of weekly jobless claims, reading the
personal consumption expenditures price index.
• The preferred measure of the Federal Reserve to
measure US inflation, and the content of the
minutes of the last meeting of the US Federal
Reserve.

15. Technical Analysis - II

16. Gold Price Attempts To Recover –
Analysis
• Gold price trades with clear positivity now, to
test 1797.00 level and attempts to breach it,
which urges caution from the upcoming
trading.
• As the price needs to hold below this level to
keep the bearish trend active, which targets
1770.00 mainly.

17. Gold Price Trades With Clear
Positivity
• Note that breaching 1797.00 and holding
above it will push the price to achieve
additional gains and test 1825.15 before any
new attempt to decline.
• The expected trading range for today is
between 1780.00 support and 1815.00
resistance.
• The expected trend for 26 Nov: Bearish

18. Gold Price Shows Additional Positive
Trades
• Gold price shows additional positive trades to
breach 1797.00 level and opens the way to
achieve more expected gains for the rest of the
day.
• Making the bullish bias suggested in the
upcoming sessions unless breaking 1797.00 and
holding below it again, noting that the main
waited target is located at 1825.15.
• The expected trading range for today is between
1780.00 support and 1815.00 resistance.

19. Gold Price Bounced
• Gold price bounced bearishly after the EMA50
formed solid resistance against the price’s
positive attempts, to return to the bearish
track after settling below 1797.00.
• And we expect to head towards 1770.00 as a
next negative target unless we witnessed
strong breach and hold above 1797.00.

20. XAU/USD Forecast: Gold Prices
Rebound As COVID-19 Fears Take
Hold

21. XAU/USD Forecast: Gold Prices
Rebound As COVID-19 Fears Take
Hold