Fundamental view:

Gold prices rose on Thursday backed by a weaker dollar ahead of a widely expected Brexit trade deal, with uncertainties around a new variant of the coronavirus overshadowing vaccine optimism. A combination of a weaker dollar, negative real rates and low yields along with uncertainties around the new strain of coronavirus is helping gold at the moment.

The Democrats today attempted to fulfil one of Trump’s demand by requesting an increase to the size of the Covid-19 stimulus cheques in line with Trump’s request in the House. Unanimous consent was needed for this, however, and the House Republicans did not play ball. Indeed, House Republican leader McCarthy has rejected Trump’s demand to increase the size of the stimulus cheques.              

The major economic events deciding the movement of the pair in the next week are Dallas Fed Manufacturing Index at Dec 28, S&P/CS HPI Composite-20 y/y at Dec 29, Pending Home Sales monthly report, EIA Crude Oil Stocks Change at Dec 30, and Initial Jobless Claims at Dec 31 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.55% higher than the previous week. Maintaining high at 1906.7 and low at 1855.1 showed a movement of 516 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 1905.6 may open a clean path towards 1932.0 and may take a way up to 1957.2. Should 1854.0 prove to be unreliable support, the XAUUSD may sink downwards 1828.8 and 1802.4 respectively. In H4 chart falling wedge pattern breakout favors prospects of a bullish trend. Also to be noted bullish harami formation exerts the expectation of uptrend for the pair.