Title: Gold Price Forecast: XAU/USD bulls flirt with 100/200-DMA confluence hurdle, around $1,790

Dec 08, 2021 1:10 AM ET

By: AnalysisWatch

Gold rose for the second day in a row, climbing to a one-week high in the $1,790 area at the start of trading on Tuesday. Declining US government bond yields weakened the US dollar and proved to be a key factor in benefiting the dollar-denominated commodity. In addition, rising geopolitical tensions supported the safe-haven precious metal and contributed to the rise.

The US recently announced that it would boycott the Beijing Winter Olympics in protest against China's alleged human rights abuses and a crackdown on Uighur Muslims.

Relations between the US and Russia have also deteriorated after US President Joe Biden threatened to impose severe economic and other measures on Russia if it invaded Ukraine. This dampened recent optimistic moves in the financial markets.

Investors abandoned any concerns about the impact of the new coronavirus variant on the economic recovery after reports suggested that Omicron patients had shown only mild symptoms. This was reflected in a strong two-day rally in equity markets, which tends to lead to a move out of traditional safe-havens. Nevertheless, the gold price has managed to stay in positive territory so far, with the bulls waiting for a sustained move above the 200-day SMA.

Attention now turns to the latest US consumer inflation figures due for release on Friday. The data will influence the US Federal Reserve's decision on a faster pace of tapering of its stimulus measures and set the stage for a possible rate hike in 2022. It is worth noting that money markets have priced in the possibility of a May rate hike. Therefore, the consumer price index report in the US will play a key role in influencing the short-term price of non-interest-bearing gold.