gold prices are currently stabilizing around $2,650 as attention shifts toward upcoming U.S. economic data and a speech from Federal Reserve Chair Jerome Powell. The recent strength of the U.S. Dollar is primarily driven by market apprehensions surrounding China’s economic performance and ongoing uncertainty about the Fed’s interest rate strategy.
In the latest economic indicators, U.S. Job Openings and Labor Turnover Survey (JOLTs) data revealed a better-than-expected job market with openings increasing to 7.744 million, surpassing forecasts. Although this positive data momentarily strengthened the Dollar, it could not maintain momentum, resulting in continued support for gold prices. The market’s expectations for a 25 basis points interest rate cut by the Fed later this month remain unchanged, with a 73% probability of a reduction in December.
Early trading on Wednesday showed that gold struggled to push higher, with demand for the Dollar persisting due to a risk-averse atmosphere. Concerns surrounding China’s economic stability and U.S.-China trade tensions have negatively impacted market sentiment. Notably, China’s Caixin Services PMI experienced an unexpected decline to 51.5 in November, contrasting with expectations for an increase.
Additionally, China’s recent announcement of a ban on certain exports to the U.S. related to critical industries has heightened fears about economic tensions and could influence gold ’s position as a safe haven asset. A sustained increase in risk aversion may bolster gold prices.
The upcoming U.S. ADP Employment Change data, predicting job growth of 150,000 for November, coupled with Powell’s address, could significantly impact market perceptions. A weaker employment report may reignite speculation concerning further Fed rate cuts, potentially supporting an uptick in gold prices. However, Powell’s insights are expected to be critical in shaping the market’s future direction ahead of the release of the U.S. Nonfarm Payrolls data on Friday.
From a technical perspective, gold is currently facing resistance at the 21-day SMA of $2,636, while the 14-day Relative Strength Index indicates indecision among traders. For gold to regain upward momentum, it must reclaim this resistance level; failure could lead to a revisit of previous lows, notably if the $2,621 support level is breached.
