Fundamental view:

Gold had a poor week and dropped to a fresh three-week low, around the $1.782 level as a reaction to Hawkish fed and mixed US jobs report. Central bank released the Minutes of its December meeting, which showed that policymakers began discussion about the reduction of their bonds holding in the upcoming months. And also Fed a judged that conditions for a rate hike could be met soon suppose if the recent pace of labor market improvements continued. Federal Reserve President James Brian Bullard  said “The FOMC is in (a) good position to take additional steps as necessary to control inflation, including allowing passive balance sheet runoff, increasing the policy rate, and adjusting the timing and pace of subsequent policy rate increases,” “With the real economy strong but inflation well above target, US monetary policy has shifted to more directly combat inflation pressure,” Bullard said, adding that he expects cases of the omicron variant to slow in the coming weeks.

Talking about the Job data, The NFP showed that the economy had added 199K new jobs in December, which is far less than estimation of 400K. However, The disappointment was offset by an upward revision of the previous month’s reading to 249K from 210K. Additionally, the unemployment rate fell to 3.9%, beating expectations for a modest downtick to 4.1% from 4.2% previous. Elsewhere, the finding that widely spreading Omicron leads to less hospitalization and death compared to previous variant delta creates optimisms However; the disruption in the services due to the rising cases of Omicron slows down the economic growth further leading to a tepid market sentiment.              

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Testimony at Jan 11, EIA Crude Oil Stocks Change, Federal Budget Balance at Jan 12, Initial Jobless Claims at Jan 13, Retail Sales monthly report and Fed Industrial Production yearly report at Jan 14 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.07% higher than the previous week. Maintaining high at 1831.6 and low at 1782.2 showed a movement of 494 pips.

In the upcoming week we expect XAU/USD to show a bearish trend. The Instrument is trading below the 100 Simple Moving Average and the MACD trades to the downside. Should 1774.7 proves to be unreliable support then the pair may fall further to 1753.7 and 1725.3 respectively whereas a solid breakout above 1824.1 will open a clear path upward to 1852.5 and then will further raise up to 1873.5. In H4 chart M-Pattern breakout favors prospects of a bearish trend. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.