XAUUSD: Bearish channel with target at 2010!
Gold (XAU/USD) has been subject to a blend of economic indicators and policy projections. After dipping to a several-week low at $2,017, gold regained momentum, surpassing $2,030. This rebound was bolstered by a drop in the yield of the 10-year US Treasury bonds below 4%. As a result, XAU/USD successfully mitigated a substantial part of its daily losses.
Various factors contributed to this volatility:
US Dollar and Economic Data: The US Dollar experienced slight pressure due to mixed US data and the minutes from the Federal Open Market Committee (FOMC) meeting. Despite indications of potential rate cuts in 2024, the precise timing is still unclear.
Labor Market Indicators: The ADP survey revealed stronger-than-expected private job growth, aligning with pre-pandemic hiring patterns and suggesting stability. The significant December US jobs report also pointed to a resilient labor market, adding 216K new jobs compared to the anticipated 170K, while maintaining an unemployment rate of 3.7%.
Factory Orders and Service Sector: US Factory Orders in November unexpectedly rose, reflecting economic strength. However, the service sector, a substantial part of the US economy, slumped, with the ISM's Non-Manufacturing Index falling to its lowest point since May.
Federal Reserve's Stance: Federal Reserve officials have stressed the need to maintain stringent financial conditions to prevent inflation resurgence. The market is predicting a possible rate cut at the March meeting and a total of five 25 basis points rate cuts for 2024.
Global Tensions and Economic Concerns: Issues like China's economic struggles and Middle East tensions might drive investors towards the safety of gold. Nonetheless, high US bond yields, bolstering the US Dollar, continue to suppress the gold price.
Technical Outlook: Technically, gold prices are nearing recent lows. Critical support is identified near $2,030, with potential further decline towards the $2,000 mark. In contrast, resistance is situated around $2,050, extending towards the $2,077 zone.
Forecast: My expectation for the start of this week is bearish, and I anticipate a rebound to the 2035-2040 level (a bounce that might have already occurred with the H4 candle), after which I will consider a short position with a target of 2010. Should conditions change, I will reassess accordingly and provide new updates.
Various factors contributed to this volatility:
US Dollar and Economic Data: The US Dollar experienced slight pressure due to mixed US data and the minutes from the Federal Open Market Committee (FOMC) meeting. Despite indications of potential rate cuts in 2024, the precise timing is still unclear.
Labor Market Indicators: The ADP survey revealed stronger-than-expected private job growth, aligning with pre-pandemic hiring patterns and suggesting stability. The significant December US jobs report also pointed to a resilient labor market, adding 216K new jobs compared to the anticipated 170K, while maintaining an unemployment rate of 3.7%.
Factory Orders and Service Sector: US Factory Orders in November unexpectedly rose, reflecting economic strength. However, the service sector, a substantial part of the US economy, slumped, with the ISM's Non-Manufacturing Index falling to its lowest point since May.
Federal Reserve's Stance: Federal Reserve officials have stressed the need to maintain stringent financial conditions to prevent inflation resurgence. The market is predicting a possible rate cut at the March meeting and a total of five 25 basis points rate cuts for 2024.
Global Tensions and Economic Concerns: Issues like China's economic struggles and Middle East tensions might drive investors towards the safety of gold. Nonetheless, high US bond yields, bolstering the US Dollar, continue to suppress the gold price.
Technical Outlook: Technically, gold prices are nearing recent lows. Critical support is identified near $2,030, with potential further decline towards the $2,000 mark. In contrast, resistance is situated around $2,050, extending towards the $2,077 zone.
Forecast: My expectation for the start of this week is bearish, and I anticipate a rebound to the 2035-2040 level (a bounce that might have already occurred with the H4 candle), after which I will consider a short position with a target of 2010. Should conditions change, I will reassess accordingly and provide new updates.
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