Gold Finds Strong Bullish Boost as Greenback Slumps

16 December 2020 | Updated: 16 December 2020

Gold (XAU/USD) capitalized on its intraday goodish climb and has now reached a new seven-day high of around $1865 in the early European session on Wednesday. The bullish move was sponsored by the persistent selling around the US dollar (DXY), which tends to bolster the dollar-denominated commodity.

The greenback remained near a 30-month low as expectations for additional US fiscal stimulus measures intensified. Demand for the dollar was thwarted even further by the strong pickup in the EUR amid the release of an upbeat Eurozone PMI report for December.

Furthermore, the fresh pullback in the US Treasury bond yields undermined demand for the USD and directed additional investment inflows to the non-yielding metal.

Meanwhile, the global risk appetite remained on the high side following the fresh optimism of the rollout of COVID-19 vaccines and hopes around an agreement on a Brexit trade deal. These factors appear to be capping any further gains in the yellow metal, for the meantime.

Moving on, investors will likely be avoiding taking any aggressive bets in gold ahead of the FOMC’s final meeting for the year. The Fed will announce its monetary decision later today, which provides investors with a clear insight on the next directional move in the precious metal.

XAUUSD – Hourly Chart

Gold (XAU) Value Forecast — December 16

XAU/USD Major Bias: Bullish

Supply Levels: $1865, $1876, and $1887

Demand Levels: $1859, $1849, and $1823

Gold has recorded a decisive break above the $1850 – $1823 consolidation range, as it aims for the $1900 round figure. At press time, the XAU/USD is locked in a battle with the $1865 resistance level. A sustained break above this resistance could bolster the commodity to take on the next resistance at $1876, as it makes its way up on our hourly ascending channel.

That said, a fall from gold’s current price level will be immediately supported by the $1859 level (base of our channel). A subsequent fall from there should be repelled by the $1849 support.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.