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The XAUUSD Retreats from Local Highs

12/12/2022 12:09 PM

Gold prices are showing an active decline, retreating from local highs from December 5, updated last Friday. The XAU/USD pair is testing 1785.00 for a breakdown, retreating ahead of the publication of November inflation statistics, which will be published before the start of the two-day meeting of the US Federal Reserve. Current forecasts assume that the Consumer Price Index will remain at 7.7%, while Core inflation may accelerate from 6.3% to 6.4%. The Fed, in turn, is expected to raise the interest rate by 50 basis points, although the regulator's updated forecasts for the near future will be more important.

In addition, meetings of the National Bank of Switzerland, the Bank of England and the European Central Bank (ECB) are expected this week. Forecasts suggest a further modest increase in interest rates, despite the fact that the economies of the UK and the eurozone are likely to enter a recession.

Meanwhile, gold is still moderately supported by geopolitical factors and the ongoing uncertainty surrounding the Russian-Ukrainian military conflict. Traders are anticipating new EU and US sanctions that could exacerbate the fragile economic balance and push the global economy further down.

There have been significant changes in the market over the past week, and according to the latest report from the US Commodity Futures Trading Commission (CFTC), the number of net speculative positions in gold amounted to 115.1 thousand against 110.0 thousand a week earlier. "Bears" still keep leadership in general positions and their balance with swap dealers is 189.529 thousand against 91.387 thousand held by "bulls". As for the dynamics, the sellers increased the number of contracts by 3.143 thousand, while the buyers reduced them by 6.106 thousand, which does not speak in favor of the local growth of the asset.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing from above, reflecting ambiguous nature of trading in the short/ultra-short term. MACD is declining, forming a new sell signal (trying to consolidate below the signal line). Stochastic, after a short rise last week, reversed into a horizontal plane, indicating an approximate balance of power in the ultra-short term.

Resistance levels: 1800.00, 1816.62, 1828.22, 1843.37. | Support levels: 1786.28, 1765.66, 1753.09, 1734.91.

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