Title: Gold Price Forecast: XAU/USD pressuring lows near $1,770 amid firmer yields, US inflation eye

Dec 10, 2021 3:44 AM ET

By: AnalysisWatch

The gold price is extending its setback from Thursday's five-day high after stalling its initial rally in the face of a renewed rise in US Treasury yields across the curve. As a result, gold is set to post its fourth consecutive weekly loss as it is unable to break above the critical confluence zone of the 100- and 200-day moving averages (DMAs) at $1,792.The bears are now moving towards strong support at $1,760, with US inflation data providing fresh trading impetus. The US Consumer Price Index (CPI) will come in at 6.8% in November, up from 6.2% the previous month. The US inflation data should underpin the Fed's aggressive expectations, with a 44% probability of a June 2022 rate hike, according to the CME Group's FedWatch tool. Meanwhile, sentiment on yields and the dollar will continue to influence gold prices.

Gold prices saw some buying in Asian trade on Friday, partially recovering from the previous day's decline and approaching the weekly low again. Mixed headlines about the Omicron variant of the coronavirus dampened recent optimism, which was reflected in a quieter tone in equity markets. This was interpreted as a key factor in the safe-haven XAU/USD regaining some ground.

Meanwhile, the US dollar struggled to capitalise on the previous day's positive performance and saw subdued or range-bound price action on the last day of the week. This provided further tailwinds for dollar-denominated commodities, even if the uptrend was not convincing enough. Gains in non-yielding gold were limited by expectations that rising inflationary pressures would force the Fed to tighten sooner rather than later.