XAUUSD to move above $2000?

XAUUSD bulls have managed to move closer to the $2000 psychological level this week amid the weakening greenback and US bond yields.

Lower-than-expected CPI data last week (0.2% vs 0.3% expected Core MoM) along with a decrease (3.79M vs 3.9M expected) in existing home sales have signaled a potential cool down in the US economy.

However, that’s been offset by the slightly lower-than-expected weekly US jobless claims, which suggests lingering resilience in the labour market.

A potential slowdown in economic activity has already translated into a lower probability for further policy tightening, thus increasing interest for the zero-yielding gold.

At the time of writing the probability of another interest rate hike in January 2024 sits at a mere 6.2% (8.6% - one week ago; 31.3% - one month ago)

While the interest rates outlook has turned more dovish, the FOMC minutes published earlier this week have underlined an ongoing “data driven approach” leaving the possibility for a further hikes if necessary.

On the technical side… 

• The current XAUUSD price is placed above 21-, 50- and 100-period SMA, indicating a potential for a strong bullish trend
   
• The key potential support levels are placed at $1980 and $1990 round numbers
   
• The key potential resistance level is placed right above $2000, with bulls having to first conquer the late-October cycle high of $2009.44
   
• While waiting for fresh catalysts, a consolidation pattern may form around $1989-$1998