Gold jumped almost $200 an ounce from the levels of November lows, and in anticipation of important statistics on US inflation and the Fed meeting, buyers decided to fix part of the profits. This led to a natural pullback. TD Securities said a noticeable consolidation is required before the trend followers in the precious metal trade return to the market and provoke further price hikes.

The transition of XAUUSD to trading in range will give time to assess the situation. Gold fans are counting on updating historical highs, and opponents are calling for caution. One of the main bulls, Standard Chartered, claims that amid the fall of Bitcoin to $5,000 and the associated overflow of capital from the cryptocurrency market to the precious metal market, the latter will rise to $2,250 an ounce, or approximately 26% from current levels.

Saxo Bank mentions the so-called "outrageous scenario," according to which the increase in military spending will lead to a new round of inflation, which will get out of control of the central banks. As a result, fiat currencies will depreciate, and gold will skyrocket to $3,000 an ounce.

Such forecasts are based on market shocks, but if we take into account the traditional drivers, the figures will be much less impressive. ING notes that the precious metal will rise steadily only when the Fed comes to the end of the monetary restriction cycle and inflation slows significantly. As a result, the dollar will suffer, the reduction of speculative positions on which became the key trump card of gold bulls in November.

Dynamics of speculative positions in the US dollar and other currencies

ING expects the precious metal to rise to $1,850 an ounce in the fourth quarter of 2023 after a significant drawdown in the first half of next year. Commerzbank also warns investors that it is too early to rejoice. In its opinion, a slowdown of monetary restriction by the Fed is one thing, a "dovish" reversal is another. Only when the central bank starts cutting rates will gold shine. As long as the cost of borrowing rises and then plateaus and stays there for a long time, the XAUUSD will storm.

Shock scenarios attract attention, but traders should focus on the real stuff. First and foremost, the Fed's monetary policy, the dynamics of the dollar, and Treasury bond yields. Yes, the Fed intends to raise the federal funds rate by 50 bps in December rather than 75 bps, but after peaking at 5.00–5.25%, the cost of borrowing could be there for a very long time. In this regard, it is too early to bury the U.S. dollar. If it rises from the ashes, XAUUSD is in trouble.

Technically, after it reached the target of 88.6% of the Bat pattern, risks of a pullback towards 23.6%, 38.2% and 50.0% Fibonacci of the last rising wave increased. For now, it makes sense to try to win back the inside bar by selling gold from $1,767 and buying it from $1,777 an ounce.