Gold prices rose on Friday as the dollar fell, but they were still on track for their first weekly fall in three weeks, driven down by hints from US central bankers that more interest rate hikes are on the way. According to Jigar Trivedi, an analyst at Mumbai-based Reliance Securities, gold could stay volatile until the Federal Reserve provides clear direction.
The dollar index, a competing safe haven, fell slightly, making gold more affordable for global buyers. However, the US dollar was on track for its strongest week in a month, as hawkish words from Fed officials and robust retail sales slowed a drop sparked by signs of easing inflation.
Following four consecutive 75-basis-point raises, markets are already pricing in an 87% chance of a 50-basis-point hike at the Fed’s December meeting. Although gold is considered an inflation hedge, rising interest rates and bond yields increase the opportunity cost of keeping bullion.
According to analysts, institutional investors are hesitant, and further rises for gold may be elusive.
Let’s have a look at the technical forecast.
Gold Technical Outlook
Gold price settles below the $1,765 level to maintain the suggested correctional bearish pressure for the upcoming period. A closer look at the chart reveals that the price is forming a potential head and shoulders pattern now, so breaking $1,754 will activate the negative effect of this pattern and press on the price to achieve negative targets that begin at $1,746.40 and extend to $1,721.65.
As a result, the bearish trend scenario will remain valid today, with a break of $1,765 followed by $1,770.70, stopping the expected decline and returning the price to the main bullish trend. Today’s trading range is likely between $1,740 support and $1,780 resistance.
Next week’s projected trend: Bullish
Read More: Gold Ends the Week Below $1,750 – Quick Weekly Outlook