Gold Up or Down – Analysis and Forecast – December 10, 2023
gold rises or falls
In this article, we will discuss fundamental and technical analysis of gold, the most effective commodity and indicator in the foreign exchange market.
Many traders welcome gold as a safe and highly volatile capital. This analysis was published in: Sunday, December 10, 2023.
Since last Monday and with the start of the business day in the foreign exchange market, global gold has conquered its historical highs (i.e. $2148 price) and has started to fall, or maybe even undergo a correction for the rest of the week. Its upward momentum.
Gold-related events in the foreign exchange market last week:
As we saw last week, rising geopolitical tensions allowed global gold to break past historic highs near $2150 during the Asian trading session.
In fact, tensions began when Yemeni rebels attacked three merchant ships in the Red Sea as the Israeli war continued, and in response, the United States attacked and shot down all three drones. However, gold, the world’s safe capital, suffered a large gap due to the effects of fear, and many traders who expected gold to hit the world’s highest price took profits.
However, in what follows, the scenario has changed from the basic point of view.
Then data released from China on Tuesday showed the Caixin Services Purchasing Managers’ Index rose from 50.4% to 51.5%.
Of course, the work did not end there, and the market was waiting for an important report on job changes.
Job openings fell from 9.3 million in September to 8.7 million on the last business day of October, according to the latest report from the Bureau of Labor Statistics.
In another positive report, the U.S. ISM Services PMI increased from 51.8 in October to 52.7 in November, indicating acceleration and growth in the services business segment. And the yield on 10-year Treasury bonds fell to the 2% range, and this important factor helped gold find support on its own.
U.S. private sector employment increased to 103,000 in November. It’s not bad that the market was waiting for the figure of 130,000, which was much lower than the market expected.
An interesting thing happened after this report. First, the market’s risk-aversion has allowed the U.S. dollar to remain strong compared to its peers despite the weak report. Second and another interesting thing is that with the fall in Treasury yields, global gold also remained stable at the same support zone and did not show any further decline.
On Thursday morning, the People’s Republic of China’s General Administration of Customs said China’s trade surplus in November increased from $56.53 billion to $68.39 billion, while China’s annual imports fell 0.6% during the same period. The news ended the business day near the $2030 price level.
Then came Friday, the day the market was awaiting the National Employment Facts (NFP) report.
In a recent report, the U.S. Bureau of Labor Statistics said the number of jobs created in the private sector increased to 199,000 in October. It is not bad that the announced figure is much better and higher than the 150,000 last month and the 180,000 predicted by economic analysts.
More importantly, when this news broke, the unemployment rate in October fell from 3.9% to 3.7%, and the yield on 10-year Treasury bonds soared immediately to 4.2%. As a result, world gold prices fell to 2010 dollar levels.
Important market events and economic news for next week:
Next week, there will be significant economic news and events in the markets before traders prepare for the New Year holidays, setting us up for a volatile and risky end to the year.
The most important news of next week, which is very important regarding the Federal Reserve’s future policy and the US Consumer Price Index (CPI) report, is scheduled to be released next Tuesday.
As you know, October inflation (meaning monthly inflation) was unchanged. If US monthly inflation turns negative in November for any reason, the US dollar will immediately start falling and global gold will rise.
Investors and traders are also awaiting the monthly net inflation (Core CPI) report, which shows an increase of 0.2% for the second month in a row. If the core CPI rises to around 0.4% for any reason, the US dollar will rise significantly.
Next Wednesday can be said to be the most important event of the next week. The Central Bank of America is scheduled to hold its last meeting of 2023 next Wednesday to decide on bank rates.
In addition, the U.S. Federal Reserve System (Fed) plans to announce a summary outlook of the United States’ revised economic situation, abbreviated as a dot chart (SEP), at this important meeting.
Investors may, for some reason, decide that the Central Bank of America has raised interest rates in the 5.25 to 5.25 range to 5.5%. If left unchecked or left unchecked, the market will be very volatile.
CME Group’s popular interest rate forecasting tool found that about 60% of market participants believe the Fed will cut interest rates by 25 basis points by March.
Don’t forget that financial market traders and investors will eagerly follow dot chart reports to detect changes in Federal Reserve policy.
Meanwhile, Fed Chairman Powell’s last press conference of the year may also have an impact on the performance of XAU/USD following the immediate reaction on the SEP.
Chairman Powell is likely to avoid any macro policy changes at the Fed as early as 2024 and likely not mention them as the Fed may still rely on a ‘data-driven’ approach.
The most important event of next week is the European Central Bank (ECB) and Bank of England (BoE) interest rate meeting scheduled to be held on Thursday.
If, for whatever reason, the Fed, unlike the Fed, adopts a more cautious policy approach to fundamental changes in macro banking policy, the markets will reflect this immediately.
If this scenario occurs, both the EURUSD and GBPUSD currency pairs will start to strengthen and the weakening US dollar will help gold, pushing it higher.
Conversely, if the two central bank authorities in Europe and the UK are in favor of lower interest rates, the US dollar will strengthen and gold will fall again.
Weekly technical analysis of gold:
If you look at the gold daily chart, you can see that the lowest price of gold last week was $1994 and the highest was $2148, down 3.26%.
The (RSI) indicator shows that gold has lost upward momentum and a further correction is not far off.
Critical support levels for gold:
If gold starts to fall, the first important support level will be $2000. If the market declines below this area, the next important level is $1980. Finally, if gold moves below this area, the next important level will be the very important area of $1960.
Key Gold Resistance Levels:
If gold rises, the first important resistance level will be $2020. If the market uptrend is above this area, the next important trend level is $2060. Finally, if gold crosses this area, the next important level would be $2080.
Advice for traders:
