GOLD correction post-NFP with target 1975!

8 dic 2023

Gold experienced a significant shift in its trajectory, falling below its daily range and sliding towards $2,010 in response to the positive US November jobs report. Despite a subsequent recovery to around $2,020, the increase in US Treasury bond yields initiated another decline. For gold buyers, it is crucial to achieve acceptance above the $2,050 region to unlock further progress towards the $2,100 threshold. Beyond this point, opportunities for new purchases emerge, aiming for the all-time highs of $2,144. Conversely, immediate support is found at Tuesday's low of $2,009, with the critical $2,000 threshold serving as a decisive test for bullish traders. At this level, the 21-day Simple Moving Average aligns, adding significance. If gold were to surpass these levels, the next downside support is identified at the round figure of $1,980.

The lack of a clear directional trend in gold is attributed to traders refraining from placing new bets on the US dollar, which is recovering from recent losses. The USD/JPY pair recorded a significant drop, pushing the Japanese yen higher, but gold failed to capitalize on the US dollar sell-off. This was due to a rebound in US Treasury bond yields, reducing the appeal of the non-interest-bearing gold price.

Market participants are engaged in repositioning activities in US government bonds and the US dollar, anticipating the Federal Reserve (Fed) interest rate decision next week. If the data supports a deteriorating labor market, expectations of Fed rate cuts may increase, influencing the US dollar and Treasury bond yields. In such a scenario, gold is likely to reclaim the $2,050 threshold on a sustained basis. Conversely, if the data exceeds expectations, profit-taking before the Fed decision could lead to a correction in gold prices towards the $2,000 figure. This has indeed occurred, and now I expect a retest of the uptrend channel followed by a continuation towards 1,975. Greetings from Nicola, and I wish everyone a good weekend!