Gold Price Prediction: XAU/USD Set to Retest 2,000 This Year

Gold Price Prediction: XAU/USD Set to Retest 2,000 This Year

The remarkable performance of gold price has faded as demand for inflation hedges fade. The XAU/USD is trading at 1,865, which is a few points below its monthly high of 1,875. Still, gold is about 10.80% above the lowest level in August. 

Why is Gold rising?

Gold price has done relatively well recently because of the overall performance of the American economy. Here’s a recap. 

Early this month, the American Bureau of Labor Statistics published the relatively strong economic numbers. The data showed that the country’s unemployment rate crashed to 4.6% in October. This was the best performance since the pandemic started.

The US then published strong inflation data last week. The numbers showed that the country’s headline Consumer Price Index (CPI) rose to 6.2% in October. This was the highest level in more than 30 years.

And on Wednesday, data by the government showed that retail sales jumped sharply in October even as the country’s inflation jumped.

Therefore, investors believe that the gold price will do well for two main reasons. First, gold is often seen as a good hedge against inflation. This is mostly because the metal tends to do well when inflation is high. Second, there is an expectation that more governments will start to embrace gold as the pandemic ends.

On the daily chart, we see that an important thing happened this last week. The gold price managed to move above the key resistance level at 1,835. The metal had struggled to move above this level several times in July, August, and September. At the same time, gold has moved above the short and longer-term moving averages.

It also seems to be forming a bullish consolidation pattern. Therefore, the path of the least resistance for the pair is to the upside. This means that it will likely soar to about $2,000 by end of the year. This price is about 7% above the current level. This view will be invalidated if the metal falls below 1,835.

This content was originally published here.

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