Fundamental view:

Gold markets have gone back and forth during the course of the week, showing signs of volatility. Biden’s plan to introduce spending of $1.9 trillion, a figure that amounts to 9.1% of US 2020 GDP, appears to have been priced into gold prices and did not deliver a much-needed boost to the yellow metal. Treasury Secretary Janet Yellen, at her Senate confirmation hearing this week, also said the White House intended to go “big” on deficit spending to stimulate the economy, and that the benefits of recovery outweigh the costs.

Inflation expectations remain low, whilst US bond yields have risen sharply. This means that the real yield has risen in the USA, which tends to hurt gold prices.               

The major economic events deciding the movement of the pair in the next week are CB Consumer Confidence Index at Jan 26, Core Durable Goods Orders monthly report, EIA Crude Oil Stocks Change, Fed Interest Rate Decision at Jan 27, GDP quarterly report and Initial Jobless Claims at Jan 28 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.61% higher than the previous week. Maintaining high at 1875.1 and low at 1802.7 showed a movement of 724 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 1813.8 may open a clean path towards 1772.1 and may take a way down to 1741.4. Should 1886.2 prove to be unreliable resistance, the XAUUSD may raise upwards 1916.8 and 1958.6 respectively. In H4 chart rising wedge breakout favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.