Gold buyers stay hopeful whilst above the $2,016 support

Gold is holding its calm near $2,020 in the Asian session on Monday, following a sharp pullback that ended a volatile week on Friday. Progressing toward the pre-Christmas lull, XAU/USD price awaits the key US inflation report due later this week for repricing of the US Federal Reserve interest rate cut expectations for next year.

Technical Overview

Despite Fiday’s pullback in Gold price from near eight-day highs of $2,048, the path of least resistance still remains to the upside.

The daily technical setup for Gold price will conitnue to favor bullish traders so long as the 14-day Relative Strength Index (RSI) indicator holds above the midline and the price manages to defend the 21-day Simple Moving Average (SMA) at $2,016.

A daily closing below the latter could fuel a fresh decline toward the 50-day SMA at $1,982. However, the $2,000 threshold could be a tough nut to crack for Gold sellers.

On the flip side, acceptance above the $2,040-$2,050 region is critical to resuming the Gold price recovery toward the $2,100 psychological level. The next bullish target is envisioned at the all-time highs of $2,144.

Fundamental Overview

Markets are widely expecting the BoJ to move away from its negative interest rate policy (NIRP) and a hint confirming the same is expected from the Japanese central bank when it concludes its two-day monetary policy review on Tuesday.

Any surprise in the BoJ’s policy announcements is likely to spike up volatility around the USD/JPY pair, having a US Dollar-led ‘rub-off’ effect on the Gold price.

In the meantime, Gold price will continue to find support from the dovish Fed pivot, as the US central bank affirmed bets of rate cuts next year after keeping the interest rates unchanged between the 5.25% to 5.50% target range.

At the time of writing, the US Dollar is clinging to the previous recovery but subdued US Treasury bond yields are weighing on the Greenback, cushioning the downside in Gold price.

Gold price booked a weekly gain but ended Friday in the red, as investors took profits off their long positions, following an eventful Fed week while gearing up for this week’s US PCE inflation data and thin trading conditions.