XAUUSD Holds Near One-Week Low as Oil Keeps December Fed Risk Alive

Oil Keeps December Fed Risk in Focus

Spot Gold is holding near a one-week low on Wednesday after an early oil rally put inflation back in front of the market. Gold buyers are defending the low, but they are not taking offers. The bid is there. The conviction is not.

At 18:39 GMT, Spot Gold (XAUUSD) is trading $4,138.99, up $13.53 or +0.33%.

Oil Is Feeding the Inflation Side of the Trade

Oil was lower late Wednesday after touching multi-month highs earlier in the week. The early rally was driven by Middle East tension. Iran shut down talk of negotiations with Washington. Vessel attacks around the Strait of Hormuz have not stopped. That is not a headline that fades quickly. U.S. crude inventories fell more than expected last week. Distillate stocks rose. However, the build was not enough to take the supply concern off the table.

Weekly Spot Gold (XAUUSD) Technical Analysis

Spot Gold is edging lower for the week, but is still holding above a major retracement zone and attempting to form a secondary higher bottom. The market is also below $4,481.78, which is 20% down from the all-time high at $5,602.23. To some, this represents a bear market.

The main trend is down according to the weekly swing chart. A trade through $4,697.11 will change the main trend to up. A move through $3,942.10 will reaffirm the downtrend.

The minor trend is also down. A trade through $4,217.39 will change the minor trend to up and could shift momentum to the upside.

The major retracement support zone is $4,069.54 to $3,707.82. Minor 50% levels at $4,319.60 and $4,381.81 are potential resistance. These levels are just below the 52-week moving average at $4,453.78, which is providing both resistance and bearish trend guidance.

Daily Spot Gold (XAUUSD) Technical Analysis

The main trend is down according to the daily swing chart. A trade through $4,199.08 will change the main trend to up. A sustained move through the swing top at $4,217.40 would indicate that the buying is getting stronger.

A move through $4,073.55 will signal a resumption of the downtrend. Taking out the swing bottom at $4,066.54 will reaffirm the downtrend.

Controlling the trade today is a pair of 50% levels at $4,141.97 and $4,145.47. Look for a potentially bullish tone to develop on a sustained move over $4,145.47 and the bearish tone to continue on a sustained move under $4,141.97.

What to Watch

For Weekly Spot Gold, my bias is to the downside. It’s being supported by the trade on the weak side of the 52-week moving average and the downtrends on both the minor and main swing charts. A trade through $4,217.39 will turn the minor trend up and weaken my bearish outlook.

For Daily Spot Gold, my bias is also to the downside, with $4,073.55 and $4,066.54 as potential targets. A failure at these two levels will open the door for an even steeper break into longer-term targets at $3,942.10 and $3,886.46. My outlook will weaken on a sustained move over the pivot at $4,145.47.

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