Weekly Fundamental Gold Price Forecast: Can You Trust The Rebound In XAU/USD?

Gold prices have been afforded a small window where US real yields have pulled back, thanks in part to inflation expectations rising on the back of higher expected fiscal deficits (even if marginally). Even as the Federal Reserve signaling its desire to keep interest rates low through 2023, US real yields are still just back to back to the same place they were in mid-October.

The runaway nature of the pandemic, at least in the short-term, is helping keep open this small window of opportunity for gold prices. But as the US economy regains its potential thanks to the COVID-19 vaccine development and distribution efforts, it increasingly becomes an uphill slog for gold prices as investors seeking higher yielding and more growth-sensitive assets.

TOP FX EVENTS IN WEEK AHEAD

The second week of December – and the second-to-last full week of the year – offers another heavy economic calendar. Several ‘high’ rated events on the DailyFX Economic Calendar will move gold prices in different currency terms over the course of the week.

  • On Monday, the final Q3’20 Japanese GDP report will be released (gold in JPY-terms, XAU/JPY).
  • On Tuesday, the final Q3’20 Euroarea GDP report is due (gold in EUR-terms, XAU/EUR)
  • On Wednesday, the November Chinese inflation report (gold in CNH-terms, XAU/CNH) will be released and the results of the December Bank of Canada rate decision will be announced (gold in CAD-terms, XAU/CAD).
  • On Thursday, the final October UK GDP report will be released (gold in GBP-terms, XAU/GBP), the results of the December European Central Bank rate decision will be announced (gold in EUR-terms, XAU/EUR), and the November US inflation report (gold in USD-terms, XAU/USD) will be released.

GOLD PRICE RATE TECHNICAL ANALYSIS: DAILY CHART (DECEMBER 2019 TO DECEMBER 2020) (CHART 1)

Weekly Fundamental Gold Price Forecast: Can You Trust The Rebound in XAU/USD?

After the US Thanksgiving holiday, gold prices have held below significant technical support levels established in recent months. The conclusion that gold prices are in the process of carving out a near-term top remains valid.

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