Fundamental view:

Last week, the sharp upsurge witnessed in the US Treasury bond yields provided a support to the USD and caused XAU/USD to suffer losses. The benchmark 10-year reference preserved its bullish momentum and closed in the positive territory on Monday but snapped its five-day losing streak on Tuesday amid a lack of significant fundamental drivers. The most awaited news of the week, President-elect Joe Biden unveiled the highly-anticipated coronavirus relief plan, which will be worth around $1.9 trillion and will include $2,000 direct payments to Americans. However, due to the fact that markets had already priced in additional fiscal stimulus, the market reaction remained relatively muted to this announcement.              

The major economic events deciding the movement of the pair in the next week are TIC Net Long-Term Transactions at Jan 19, Building Permits, Philadelphia Fed Manufacturing Index, Initial Jobless Claims at Jan 21, Markit Manufacturing PMI, and EIA Crude Oil Stocks Change at Jan 22 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 5.12% lower than the previous week. Maintaining high at 1863.8 and low at 1817.2 showed a movement of 466 pips.

In the upcoming week we expect XAU/USD to show a bearish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1808.9 may open a clean path towards 1789.8 and may take a way down to 1762.3. Should 1855.4 prove to be unreliable resistance, the XAUUSD may raise upwards 1882.9 and 1902.0 respectively. In H4 chart rectangle pattern breakout favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.