gold prices have continued their downward trend, recently hitting a weekly low near $2,615. This decline marks a potential second consecutive weekly drop as the market moves towards the release of the crucial Nonfarm Payrolls (NFP) report. Traders are closely monitoring economic indicators that may influence future price movements.
The US Dollar has rebounded, reacting to a decline in investor sentiment linked to growing concerns over political instability in South Korea and the ongoing economic challenges in China. The Democratic Party in South Korea has announced plans to vote on an impeachment motion against President Yoon Suk Yeol, adding to the uncertainty. Additionally, reports of potential martial law declarations have further strained the political situation. These developments, coupled with fears about a slowing Chinese economy and the ongoing trade conflict with the US, have led many investors to adopt a cautious stance ahead of the NFP release.
Expectations for the NFP data suggest that around 200,000 jobs may have been added in November, a significant increase from just 12,000 in October, largely influenced by external factors like hurricanes and a strike affecting Boeing. A weaker-than-expected NFP figure could indicate continued cooling in the job market, which may prompt the Federal Reserve to consider additional rate cuts beyond December. Conversely, a robust jobs report could reinforce the notion that the Fed might pause its rate-cutting cycle.
In the backdrop of these economic indicators, the Federal Reserve’s decision-making is under scrutiny. The likelihood of a 25 basis point rate cut later this month stands at around 70%, showing a slight shift from the previous day. Meanwhile, despite a sell-off in the Dollar and a noted decline in US Treasury bond yields, gold experienced a setback, failing to gain traction following disappointing weekly jobless claims data.
Technical analysis reveals that gold has broken through a key range to the downside, with the 14-day Relative Strength Index indicating a bearish trend. A close below the short-term 21-day Simple Moving Average at $2,631 could suggest further declines, with support levels at $2,605 and $2,583. For bullish momentum to re-establish itself, gold would need to reclaim the 50-day SMA resistance at $2,668, with potential rallies aiming for the $2,700 level and a test of the November 25 high at $2,721.
