Gold Price Forecast: XAU/EUR grinds higher inside monthly ascending channel on mixed clues

• Gold reverses the pullback from monthly peak, refreshes intraday high.
• Market sentiment remains divided amid Omicron, Fed views and year-end holidays mood.
• EU’s Gentiloni cites a long way from economic collapse like fist wave.

Gold (XAU/EUR) refreshes intraday high near €1,599, up 0.15% intraday while heading into Wednesday’s European session.

The metal jumped to the highest in a month the previous day before the risk-off mood dragged it back from €1,607. The latest recovery moves, however, could be considered consolidation of previous losses amid inactive markets amid mixed catalysts.

The second day of over one million covid infections globally and record-high COVID-19 daily cases from France and the UK portray sours sentiment. However, comments from the European Economic Commissioner Paolo Gentiloni Silveri seem to battle the bears.

“EU Economic Commissioner Gentiloni intends to propose a modification of the EU stability pact in 2022,” per German media FAZ. The news adds, “The reform will include a "differentiated consideration" of heavily indebted member states.” It’s worth mentioning that the EU’s Gentiloni also mentioned, per FAZ, “We are still a long way from an economic collapse like the first covid wave.”

Elsewhere, stock futures in the US and Europe recover recent losses as the Treasury yields remain pressured amid chatters surrounding the Fed’s early rate hike and US stimulus.

Above all, a lack of major data/events joins thin end-of-year liquidity conditions to limit the gold prices.

Technical analysis

Gold prices justify the sustained trading beyond 5-DMA, around €1,597, while picking up bids inside a one-month-old ascending trend channel bullish chart pattern.

Adding to the bullish bias is the metal’s successful trading above 50-DMA, an ascending support line from the late September and firmer RSI.

That said, the quote is ready to refresh the monthly peak beyond the latest high of €1,607. However, the upper line of the stated channel near €1,614 will challenge the gold buyers afterward.

Meanwhile, a downside break of the 5-DMA level of €1,597 will drag the quote to the stated channel’s support, close to €1,586.

However, 50-DMA near €1,583 and a three-month-old support line surrounding €1,579 can challenge the gold sellers afterward.

Should the bullion prices drop past €1,579, odds of witnessing a slump towards the monthly low near €1,555 can’t be ruled out.

XAU/EUR: Daily chart

Trend: Bullish