Fundamental view:

After starting the week on the back foot and printing fresh multi-month lows, the XAU/USD pair reversed its direction and snapped a three-week losing streak. Fueled by the broad-based USD weakness, the pair gained more than 2.5% on a weekly basis. The last nonfarm payroll report of the year was quickly shrugged off as softness in hiring should keep pressure on Congress to deliver another stimulus package before the holidays.  The knee-jerk reaction for US stocks was an initial drop following the disappointing employment report. 

State and local aid for governments remains the key hurdle and at some point, over the next week, Senate Majority McConnell will need to make a concession or he could risk providing added motivation for Democratic voters for the two Georgia senate runoff races on January 5th.  White House adviser Kudlow did not provide any hints Republicans are closer to budging, keeping the uncertainty in place over the timeframe on when a deal will happen.           

The major economic events deciding the movement of the pair in the next week are Nonfarm Productivity quarterly at Dec 08, JOLTS Job Openings, EIA Crude Oil Stocks Change at Dec 09, Initial Jobless Claims at Dec 10, and CPI monthly report at Dec 11 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 1.49% lower than the previous week. Maintaining high at 1848.1 and low at 1764.3 showed a movement of 838 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 50 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1867.6 may open a clean path towards 1899.8 and may take a way up to 1951.4. Should 1783.7 prove to be unreliable support, the XAUUSD may sink downwards 1732.1 and 1699.9 respectively. In H4 chart ascending scallop pattern favors prospects of a bullish trend. Also to be noted Spinning top formation exerts the expectation of uptrend for the pair.