Gold Price Forecast: XAU/USD with room to extend gains beyond $2,050

XAU/USD Current price: 2,039.17

• The US Dollar remains pressured by Fed-inspired optimism.
• The Bank of England and the European Central Bank stayed pat on rates, as expected.
• XAU/USD is overbought in the near term but could still reach higher highs.

Gold prices maintain the positive momentum, with XAU/USD trading at around $2,040, not far from an intraday high of $2,047.90. The bright metal benefited from the broad US Dollar’s weakness, resulting from the Federal Reserve (Fed) monetary policy announcement. The central bank anticipated three rate cuts in its Summary of Economic Projections (SEP) vs two in the previous dot plot. Furthermore, Chair Jerome Powell said that rate cuts appeared on the discussion table, although pledged to keep rates higher for longer as usual.

But optimism did not come exclusively from the Fed. The Bank of England (BoE) and the European Central Bank (ECB) announced their respective monetary policy decisions on Thursday and also decided to remain pat for a third consecutive meeting. Without explicitly stating so, central bankers have ended monetary tightening. Speculative interest has started betting on pivots and rate cuts, and the latest announcements back such beliefs for 2024.

The emergent optimism weighed on the US Dollar despite upbeat United States (US) data. The country reported Retail Sales were un 0.3% MoM in November, better than the 0.1% decline expected. Also, Initial Jobless Claims printed at 202K in the week ended December 8, below the 220K forecast.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair supports a continued advance. The pair is firmly up for a second consecutive day, extending gains beyond a bullish 20 Simple Moving Average (SMA), currently at around 2,014. The longer moving averages, in the meantime, slowly grind north far below the shorter one. Finally, technical indicators advance modestly within positive levels, showing no signs of upward exhaustion.

In the near term, and according to the 4-hour chart, the risk also skews to the upside. XAU/USD extended its rally beyond all its moving averages while technical indicators pick up within overbought readings, in line with higher highs.

Support levels: 2,027.55 2,014.10 2,003.90

Resistance levels: 2,047.90 2,065.60 2,081.10