In the weekly charts, gold prices are trading in the negative territory but the overall dynamics continues to improve. Earlier this week, the bullion reached the $1,250 handle for the first time since July, which is another confirmation of reaching a bottom at $1,160 in August.
Further dynamics in the yellow metal will depend on the fate of the dollar’s bullish trend. In the short term, the American currency looks rather robust despite the mounting doubts that the Fed will proceed with its monetary tightening next year. In this context, the next week’s FOMC meeting – the last one this year – will be crucial both for the greenback and for gold prices.
The probability of a rate hike in December is high, while market expectations surrounding further tightening will depend on the central bank’s rhetoric. Any ‘dovish’ hints could send the buck lower. In this scenario, the bullion could derail the $1,250 resistance and target the next important area $1,255.
In the short term, the precious metal will likely continue to swing between gains and losses as the dollar trading still looks mixed. On Friday, the US retail sales data could support the bullion should the figures disappoint USD bulls.