Fundamental view:

Gold ended the year with a bullish bias, supported by a US dollar decline. It gained 22% over the year. The pandemic was the catalyst for the rally in 2020, and increased the safe-haven demand for the yellow metal. The epidemic in the U.S. also triggered an expansion in monetary policy easing that led to abundant liquidity and negative real interest rates , which pushed the gold prices higher. Last but not least, the loose fiscal policy expanded the fiscal deficits , which ballooned the public debt and increased fears about the debt crisis and inflation.

The major economic events deciding the movement of the pair in the next week are OPEC Meeting at Jan 04, ISM Manufacturing PMI at Jan 05, ADP Nonfarm Employment Change, EIA Crude Oil Stocks Change at Jan 06, Initial Jobless Claims, ISM Non-Manufacturing PMI at Jan 07, and Nonfarm Payrolls at Jan 08 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.31% lower than the previous week. Maintaining high at 1900.9 and low at 1869.1 showed a movement of 318 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 1909.4 may open a clean path towards 1921.0 and may take a way up to 1941.2. Should 1877.7 prove to be unreliable support, the XAUUSD may sink downwards 1857.5 and 1845.9 respectively. In H4 chart bullish pennant pattern breakout favors prospects of a bullish trend. Also to be noted spinning top pattern formation exerts the expectation of uptrend for the pair.