Fundamental view:

Gold has rallied again during the week. And a plenty of momentum is seen in the yellow metal.

The coronavirus vaccine rollout, Brexit optimism and heightened hopes for a US stimulus bill caused risk flows to dominate the financial markets and continued to hurt the greenback. Mirroring the broad-based USD weakness, the US Dollar Index, which tracks the buck’s performance against a basket of six major currencies, broke below 90 for the first time since April 2018. US Federal Reserve’s dovish policy outlook put additional weight on the USD’s shoulders toward the end of the week. Following its last meeting of 2020, the FOMC left its policy settings unchanged as expected. During the press conference, FOMC Chairman Jerome Powell said that they remain open to increasing the size of asset purchases if required. Additionally, Powell reaffirmed that the Fed will not hesitate to do more if needed by using all of its tools available.

The major economic events deciding the movement of the pair in the next week are GDP quarterly report, CB Consumer Confidence Index at Dec 22, New Home Sales, EIA Crude Oil Stocks Change at Dec 23, Core Durable Goods Orders monthly report, and Initial Jobless Claims at Dec 24 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 1.12% higher than the previous week. Maintaining high at 1896.3 and low at 1819.1 showed a movement of 772 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1912.0 may open a clean path towards 1942.7 and may take a way up to 1898.2. Should 1834.8 prove to be unreliable support, the XAUUSD may sink downwards 1788.4 and 1757.6 respectively.  In H4 chart Ascending Triangle breakout favors prospects of a bullish trend. Also to be noted bullish harami pattern formation exerts the expectation of uptrend for the pair.