Gold Price Forecast: XAU/USD paints a bullish technical picture ahead of the Fed

Gold has struggled to make headway amid Omicron fears and higher US inflation. As FXStreet’s Yohay Elam notes, XAU/USD is at the mercy of the Fed while mid-December's daily chart is showing an ascending triangle, which is bullish.

Decisions by two other major central banks are worth watching

“Chair Jerome Powell and his colleagues will likely accelerate the pace of tapering their bond-buying scheme. For gold, such a move is adverse but mostly priced into XAU/USD. However, any deviation from a modest acceleration from $15 to $20 billion/month could rock markets. A surprise announcement of a $25 billion/month tapering pace would hurt the value of XAU/USD. Conversely, if the Fed fears Omicron and decides against changing its policy, gold would shine.”

“It is also worth watching the bank's updated forecasts for interest rates, aka the ‘dot-plot.’ If officials go for a duo of increases in 2022, the dollar could rise and XAU/USD could decline.” 

“The ECB is set to announce an expansion of one of its bond-buying schemes, to compensate for the expiry of another one. A large increase would be gold-positive and refraining from announcing anything would be adverse for the price.”

“The Bank of England is on course to leave its rates unchanged amid growing economic damage from the virus. A surprise hike would weigh on gold while a no-change decision would likely be ignored.”

“The 50, 100 and 200-day Simple Moving Average nearly converge at $1,792. This phenomenon makes that level of high importance, as a tight cap. Looking down, XAU/USD is trading alongside an uptrend support line since August. Together, these two lines form an ascending triangle – which is bullish. On the other hand, failure to break above $1,792 and downside momentum could push the price below the uptrend support line and trigger a rapid downfall.”