XAUUSD clings above $1750 after dismal US housing data

  • November 18, 2022
  • Gold Price is set to finish the week with losses of almost 1%.
  • US Existing Home Sales plunged severely as the Federal Reserve continued to tighten monetary conditions.
  • XAUUSD consolidates around $1750, awaiting a fresh catalyst.

Gold Price tumbled across the board, courtesy of a risk-off impulse, as European equities turned negatively, while Wall Street is mixed. Additional Federal Reserve (Fed) officials are crossing wires, emphasizing the need for higher interest rates after two soft October inflation reports. At the time of writing, XAUUSD is trading at $1755, below its opening price by 0.24%.

US Existing Home Sales plummeted due to Federal Reserve’s monetary policy

The US National Association of Realtors reported that Existing Home Sales for October plunged a staggering 5.9%, below a 4.17% increase estimated by analysts. Home sales have fallen since February of 2022 due to the Federal Reserve’s tightening monetary conditions as they try to curb stubbornly high inflation, which peaked around 9%. However, market sentiment remains positive throughout the session on the back of soft CPI, and PPI October reports.

In the meantime, Fed policymakers reiterated their commitment to taming inflation down. St. Louis Fed President James Bullard said that interest rates are not “sufficiently restrictive” and added that would be if the Federal Funds rate (FFR) hit the 5% to 5.25% area. On Thursday, Minnesota’s Fed President Neil Kashkari commented that one-month data can’t over-persuade the Fed, as it needs to keep at it until they’re sure that inflation has stopped climbing.

Regarding price action, the US Dollar Index, a gauge of the buck’s value against a basket of six currencies, turned red, down by a minuscule 0.07%, at 106.621, capping XAUUSD fall, which threatened to extend below $1750. US Treasury bond yields, namely the 10-year benchmark note rate, rise two bps, yielding 3.795%, putting a lid on Gold Price.

Gold (XAUUSD) Price Analysis: Technical outlook

The XAUUSD is extending its losses to three consecutive days, turning negative in the week, losing 0.85%. After climbing to a fresh three-month high at $1786.53, the non-yielding metal is retracing, set to finish the week around the $1750 area. Even though it’s an important milestone, XAUUSD could not capitalize on US Dollar (USD) weakness. However, the Relative Strength Index (RSI) slope is turning south, suggesting that consolidation in the mid $1700-$1800 is likely, as buyers regain momentum, to challenge the $1800 psychological level.

XAUUSD’s key resistance levels lie at $1786, followed by $1800, and the 200-day Exponential Moving Average (EMA) at $1802. On the other hand, XAUUSD support levels, the August 22 swing low at $1727.90, followed by the $1700 figure.