XAUUSD Forecast: Gold Locked in Wedge Before Inflation Data
The gold is in a tight range for the past few weeks as the market reflects the Omicron variant, US employment disappointing numbers and the hawkish tone of the Federal Reserve.
More on our fundamental view: forexezy.com/gold-price-prediction-ahead-of-us-inflation-data
In November, FOMC decided to unwind the $120 billion/month quantitative easing. It started to reduce the purchases by $15 billion/month. At the time, the goal was to end the purchases by June next year.
The testimony last week noted, that the Fed would accelerate the pace of quantitative easing (QE) tapering. The central bank will aim to end its QE program in the first quarter of 2022, Powell commented.
On the other side inflation numbers coming out this week will play a significant role. As the current inflation caused a Hawkish stance - there are few signs that inflation has peaked. The price of crude oil and natural gas have dropped by double-digits in the past few weeks. Other commodities have also declined, which could translate to lower inflation in future. The Omicron is not yet proved to be more deadly or contagious.
Here is my outlook on possible scenarios for the XAUUSD
If the upcoming inflation data are above the estimates and the market does not receive new hawkish signals from the Fed, the gold will move up and may touch the trendline with a high at $1830-ish. In case of the inflation data being below the estimates, the price may grind to $1760 and lower. However as for now - there are no possible predicted outcomes that will cause breakthrough of this wedge formation.
Only the "Black Swan" event, like the hypothetical war in the Eastern Europe could be the reason for the XAUUSD to break through $1850 - $1880, to confirm the safe-haven bullish trend.
More on our fundamental view: forexezy.com/gold-price-prediction-ahead-of-us-inflation-data
In November, FOMC decided to unwind the $120 billion/month quantitative easing. It started to reduce the purchases by $15 billion/month. At the time, the goal was to end the purchases by June next year.
The testimony last week noted, that the Fed would accelerate the pace of quantitative easing (QE) tapering. The central bank will aim to end its QE program in the first quarter of 2022, Powell commented.
On the other side inflation numbers coming out this week will play a significant role. As the current inflation caused a Hawkish stance - there are few signs that inflation has peaked. The price of crude oil and natural gas have dropped by double-digits in the past few weeks. Other commodities have also declined, which could translate to lower inflation in future. The Omicron is not yet proved to be more deadly or contagious.
Here is my outlook on possible scenarios for the XAUUSD
If the upcoming inflation data are above the estimates and the market does not receive new hawkish signals from the Fed, the gold will move up and may touch the trendline with a high at $1830-ish. In case of the inflation data being below the estimates, the price may grind to $1760 and lower. However as for now - there are no possible predicted outcomes that will cause breakthrough of this wedge formation.
Only the "Black Swan" event, like the hypothetical war in the Eastern Europe could be the reason for the XAUUSD to break through $1850 - $1880, to confirm the safe-haven bullish trend.
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