Gold Price Forecast: XAU/USD flirts with 200-day SMA, remains below $1,800 mark

• Gold price continues with its struggle to find acceptance above the 200-day SMA.
• A modest US Dollar bounce is seen as a key factor capping the upside for the metal.
• Rising bets for a smaller 50 bps rate hike by the Federal Reserve act as a tailwind.
• The focus remains on next week’s release of the US CPI and FOMC policy meeting.

Gold price extends its steady ascent for the fourth straight day and climbs back closer to the $1,800 mark on the last day of the week. The XAU/USD, however, struggles to find acceptance or capitalize on the move beyond a technically significant 200-day Simple Moving Average (SMA).

Modest US Dollar rebound caps Gold price

The US Dollar stages a modest intraday bounce from a multi-day low touched earlier this Friday, which, in turn, is seen as a key factor acting as a headwind for the Dollar-denominated Gold price. The USD uptick, meanwhile, lacks any obvious fundamental catalyst and runs the risk of fizzling out amid the uncertainty over the Federal Reserve's rate hike path.

Investors seek clarity on Federal Reserve’s rate hike path

The recent comments by several policymakers, including Federal Reserve Chair Jerome Powell, suggest that the US central bank will slow the pace of its policy tightening. In fact, the current market pricing indicates over a 90% chance of a relatively smaller 50 bps rate hike at the upcoming Federal Open Market Committee (FOMC) meeting on December 13-14.

Depressed US Treasury bond yields should lend support to Gold price

This is reinforced by the ongoing decline in the US Treasury bond yields, which should cap the upside for the US Dollar and lend support to the non-yielding Gold price. That said, the incoming stronger macro data from the United States fueled speculations that the Fed could lift interest rates more than estimated, which is acting as a headwind for the XAU/USD.

Consumer Price Index from the United States will also be in focus

Heading into the key central bank event risk, investors next week will also watch out for the latest consumer inflation figures from the United States. The crucial CPI report for November is due for release on Wednesday and will influence the Fed's policy outlook. This, in turn, will drive the US Dollar and provide a fresh directional impetus to Gold price.

Traders look to US macro data for short-term opportunities

In the meantime, traders on Friday will take cues from the US economic docket, featuring the release of the Producer Price Index (PPI) and the Prelim Michigan Consumer Sentiment Index. This, along with the US bond yields and the broader risk sentiment, should produce short-term trading opportunities around Gold price later during the early North American session.

Gold price technical outlook

From a technical perspective, Gold price, so far, has been struggling to find acceptance above the very important 200-day Simple Moving Average (SMA). This makes it prudent to wait for some follow-through buying beyond the $1,800 mark before confirming a fresh bullish breakout and positioning for any further appreciating move. The next relevant hurdle is pegged near the $1,809-$1,810 zone, above which the XAU/USD could climb to the $1,830 hurdle en route to the $1,843-$1,845 supply zone.

On the flip side, any meaningful pullback is likely to find some support near the $1,775-$1,774 area ahead of the weekly low, around the $1,765-$1,764 region. Some follow-through selling, leading to a subsequent break below the $1,761-$1,760 horizontal resistance breakpoint, will negate any near-term positive outlook. Gold price might then turn vulnerable to test the $1,738-$1,737 support zone before eventually dropping to the $1,725 level.

Key levels to watch