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Gold Price Forecast: Key Trends to Watch

Discover Gold's price forecast and the factors that may influence its near-term trajectory with this comprehensive analysis.

Gold Ingots
Gold Ingots

Gold Price Forecast: XAU/USD Bulls Need to Commit at Key Trendline Support

The Gold price has found demand at key trendline support and has moved back in line with the broader bullish trend. On Friday, the Gold price was supported by cooling inflation data, as US consumer spending rose 0.1% in November after climbing 0.4% in October. This suggests that inflation is cooling, although not as much as markets would like to see in order to expect a pivot from the Federal Reserve or a slowdown in their rate-hike path. The year-over-year Personal Consumption Expenditures index landed at 5.5%, a half-percent cool-down from October. However, the October PCE inflation data was upwardly revised.

The recent data suggests that the US economy has rebounded faster than previously estimated and that the jobs market remains tight. This does little to change the speculation that the Fed will continue to fight inflation in 2023 with rate hikes. Such hikes weigh on the non-yielding asset of Gold, which is now on track for a second consecutive yearly decline.

Analysts at Brown Brothers Harriman have noted that markets still don't believe the Fed. They stated, "We cannot understand why the markets continue to fight the Fed. With the exception of some communications missteps here and there, chair Jerome Powell and the company have been stubborn about the need to take rates higher for longer. Recent US data confirm that the labor market remains strong and that the Fed will have to do more."

Gold Price Technical Analysis

In our previous analysis, we stated that a correction in the Gold price would be expected, respecting the bullish trend. The Gold price has now returned to the line with the coil and is expected to continue higher or at least stay sideways. If this does not happen, we could see an even deeper move in the Gold price in the days ahead, potentially leading to a significant downside correction with a target of $1,775.

It's important to note that technical analysis is just one tool that can be used to forecast market movements, and it should be used in conjunction with fundamental analysis and other methods. It's also worth remembering that the Gold market is subject to various factors that can impact its prices, such as global economic conditions, geopolitical events, and investor sentiment. As with any investment, it's important to thoroughly research and carefully consider your own financial goals and risk tolerance before making any decisions.

Gold Price Outlook

Overall, the Gold price appears to be respecting the bullish trend, and there are some indications that it could continue higher or at least stay sideways. However, there are also potential headwinds that could impact its price, such as the potential for further rate hikes from the Federal Reserve. Investors should keep a close eye on the Gold market and be prepared for potential shifts in its price. It's also important to have a well-diversified investment portfolio to help manage risk and to consult with a financial advisor before making any investment decisions.