Gold prices inched higher on Thursday as the dollar eased, while investors shifted their focus away from the U.S. Federal Reserve to other key central bank meetings.
Spot gold was up 0.2% at $1,780.63 per ounce by 0135 GMT. U.S. gold futures rose 0.9% to $1,780.20.
The dollar index (.DXY) moved lower from a three-week high hit in the previous session.
The Fed said on Wednesday it would end its pandemic-era bond purchases in March and paved the way for three quarter-percentage-point interest rate hikes by the end of 2022.
The European Central Bank (ECB), the Bank of England (BOE), as well as the Swiss National Bank and Norges Bank, will hold policy meetings later on Thursday.
Spot silver was flat at $22.05 an ounce.
Platinum shed 0.1% to $918.01 and palladium gained 1% to $1,613.61.
· Gold Price Forecast: XAU/USD contemplates next move ahead of BOE, ECB decisions
Gold price enjoyed good two-way businesses on the much-awaited hawkish Fed decision, with the bulls finally fighting back control from two-month lows of $1,753. The Fed doubled the pace of tapering to $30 billion per month while the dot plot showed three rate hikes for 2022. The decision offered something for both gold bears and bulls, as the price tumbled to two-month lows amid a spike in the US dollar, in an initial reaction to the announcement.
However, markets took the Fed outcome positively in their stride on speculation that the hawkish stance will help combat inflation without derailing economic growth. Fed Chair Powell also soothed the markets by noting that the economic data was key and that the path or rate hikes were not certain but any measure. The market optimism downed the safe-haven dollar while driving gold price back northwards. Gold price finally settled just below the daily highs of $1,781, shrugging off the risk-on sentiment and uptick in the US Treasury yields.
This ‘Super Thursday’ gold price is building onto the previous rebound, although remains well below the critical resistance at $1,790. The greenback and yields hold the lower ground, in the aftermath of the Fed-driven volatile trading. Attention now turns towards the monetary policy announcements from the Bank of England (BOE) and European Central Bank (ECB) for fresh trading direction in gold. The BOE is expected to hold back a rate hike, in the face of the looming Omicron threat to the economy. Meanwhile, the ECB is seen boosting its regular asset purchase program (APP), which could likely be their way of replacing its Pandemic Emergency Purchase Program (PEPP). These are the final policy decisions of this year, which will set the tone for markets, dollar valuations and gold in the coming year.
· Gold Price Chart - Technical outlook
Despite Wednesday’s turnaround, gold price could likely keep it's bullish potential intact while it remains below a dense cluster of healthy resistance levels at $1,790. That level is the confluence of the downward-sloping 21-Daily Moving Average (DMA) and horizontal 100-DMA.
This premise is justified by a potential bear cross spotted on the daily sticks, with the 21-DMA looking to pierce the 100-DMA from above. Meanwhile, the 14-day Relative Strength Index (RSI) remains below the midline, keeping gold sellers hopeful.
Acceptance above $1,790 will expose the next stop for bulls around $1,796, the confluence of the 50 and 200-DMAs. Further up, the $1,800 mark could be retested.
On the downside, the November lows of $1,759 remain on the sellers’ radars, below which the two-month lows could be back in play.
· EU warns Russia: If you invade Ukraine, there will be a high price to pay
· ECB plots stimulus exit as inflation looms
European Central Bank policymakers will gather on Thursday for a crunch meeting, as soaring inflation heaps pressure on the bank to wind down its stimulus just as a new coronavirus variant threatens to derail the recovery.
The Frankfurt-based institution is expected to confirm the planned end of its massive pandemic-era stimulus plan in March, currently hoovering up around 70 billion euros ($78 billion) worth of assets every month.
The 1.85-trillion-euro pandemic emergency bond-buying programme (PEPP) is the ECB's main crisis-fighting tool, aimed at keeping borrowing costs low to stoke economic growth.
· Japan's factory activity growth slows in December - flash PMI
Japan's manufacturing activity expanded for an 11th straight month in December, but at a slightly slower pace than the previous month as weaker output and new order growth softened.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) fell to a seasonally adjusted 54.2 from a final 54.5 in the previous months.
· Malaysia imposes stricter rules, booster requirements over Omicron threat
Malaysia on Thursday (Dec 16) announced new Covid-19 restrictions, including banning mass gatherings and requiring booster doses for high-risk groups, as it reported its second case of the Omicron coronavirus variant.
· South Korea says it will reimpose curfews on businesses and tighten social distancing rules as the number of COVID-19 infections and severe cases reach record highs.
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