Fundamental view:

The yellow metal traded in a tight range during the beginning of the week but later managed to portray a decisive rebound and broke above $1,800 on Friday and snapped a four-week bearish streak. The US central bank announced the monetary policy which was same as per the market  expectation. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying  $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month, and also means sooner rate hikes. Elsewhere, The Fed’s dot-plot now implies three rate hikes in 2022 and three more in 2023. Moreover, The inflation forecasts have been raised to 5.6% for 2021 and 2.6% for 2022, up from 4.2% and 2.2% previously.

Amidst the inflation fear, reports suggesting that the coronavirus Omicron variant is much more contagious than the Delta variant weighed heavily on market in the later half of the week which created risk aversion sentiment. Elsewhere, The UK reported more than 80,000 confirmed cases on Thursday and vaccine producers’ initial findings showed that Omicron was much more resilient against two shots than the previous variants. Reflecting the risk-averse market environment, gold continued to gather strength heading into the weekend.

The major economic events deciding the movement of the pair in the next week are GDP quarterly report, CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, Core Durable Goods Orders monthly report, Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 1.18% higher than the previous week. Maintaining high at 1814.3 and low at 1752.5 showed a movement of 618 pips.

In the upcoming week we expect XAU/USD to show a bullish trend. The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1823.7 may open a clean path towards 1849.9 and may take a way up to 1885.5. Should 1761.9 prove to be unreliable support, the XAUUSD may sink downwards 1726.3 and 1700.1 respectively. In H4 chart ascending scallop pattern favors prospects of a bullish trend. Also to be noted hammer formation exerts the expectation of uptrend for the pair.