Gold (XAU/USD) continued to trade strongly on Wednesday, with its price consolidating above the $4,150 resistance level. The upward momentum for gold is largely driven by lower US Treasury yields and growing market expectations that the Federal Reserve will implement further rate cuts in December. These factors are simultaneously weakening the US Dollar and bolstering the appeal of non-yielding gold.
Key Market Influences:
- US Economic Data: US Retail Sales data on Wednesday proved disappointing, while producer prices held steady, and consumer confidence deteriorated.
- Fed Rate Cut Expectations: In response to the economic data, investors have significantly increased their bets on a 25 basis point Fed rate cut in December. This outlook is creating headwinds for the US Dollar, thereby providing support for precious metals like gold.
Technical Outlook:
From a technical perspective, as long as Gold remains above $4,150, the next target level is $4,210.
XAU/USD 4-Hour Chart: Technical Outlook
Gold (XAU/USD) is extending its gains on Wednesday, with buyers actively defending the $4,150 level, which previously acted as support (November 14 low).
Momentum Indicators:
- The 4-Hour Relative Strength Index (RSI) is holding comfortably above the 60 mark, indicating strong buying interest.
- The Moving Average Convergence Divergence (MACD) continues to trend higher above its zero line, displaying green bars on its histogram, which suggests moderate bullish momentum is in play.
Key Price Levels and Trends:
- The pair successfully bounced off the 78.2% Fibonacci retracement of its early November rally, finding support around the $4,000 level.
- The subsequent move above $4,100 is seen as confirmation that the bearish correction that followed the November peak has concluded.
- Bulls are now setting their sights on the November 14 high of $4,210, with the ultimate target being the November 13 peak at $4,045.
Support Levels:
- The $4,150 level has consistently offered support during the European trading session.
- Further downside support can be found near Tuesday’s low around $4,100.
- Stronger support lies between $4,025 and $4,040, corresponding to the November 21 and 24 lows.
