Gold Price Forecast: XAU/USD bulls taking on territory above $1,800

• Gold moves in on daily resistance since correcting from support. 
• US dollar is lower and stocks were on Omicron optimism. 
• The bulls are embarking on an upside extension with $1,830/50 eyed.

Gold, (XAU/USD), is better-bid following the rally from support on the daily chart which has taken the yellow metal back into the $1,800s. At the time of writing, the yellow metal is trading at $1,804.57 and bulls have eyes on the $1,830s and then the $1,850s for the days/weeks ahead.

The US dollar was lower which helped to lift gold prices due to the optimism that the Omicron coronavirus variant will not disrupt the economic recovery. According to early results from three trials, the omicron strain may be less likely to send people to the hospital than the delta strain.

North American government bonds had a slightly mixed performance and the 10-year US yields were declining. DXY weakened by 0.4% vs most other FX. Subsequently, US stocks closed near session highs. The S&P 500 gained 1% to 4,696.56, the Nasdaq Composite rallied 1.2% to 15,521.89 and the Dow Jones Industrial Average gained 0.7% to 35,753.89. Pfizer rose after the FDA approved the covid-19 tablet for emergency use in the US.

Meanwhile, as for US data, in November, sales of previously owned homes surged for the third month in a row, while Consumer Confidence increased more than expected in December as Americans' outlook for employment and the economy improved.

Looking forward, the yellow metal could begin to lose steam so long as Fed expectations remain as status quo, analysts at TD Securities argued. ''In this sense, omicron fears and their potential impact on the economy will be a key focus in the near-term, and we would likely need to see economic weakness generate doubts that the Fed will be able to deliver on their hawkish stance for the yellow metal to maintain the recent momentum.''

However, the analysts at TDS also stated that due to the recent Fed speak indicating that March is live, they continue to think risk/reward favours respecting that outcome and hence supporting USD firmness in the new year. 

Gold technical analysis

Following the correction to $1,785. The bulls are embarking on an upside extension with $1,830/50 eyed.