GOLD Price Analysis – Dec 09, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its early-day bullish rally and drew further bids around the $2,642 level, hitting an intra-day high of $2,650.
The rally is mainly linked to expectations surrounding the Federal Reserve’s monetary policy, as Friday’s US Nonfarm Payrolls (NFP) report strengthened hopes for a rate cut in December, keeping US Treasury bond yields in check and boosting gold’s appeal.
Furthermore, the ongoing geopolitical tensions and political instability in South Korea, along with concerns about a trade war, have strengthened gold's appeal as a safe-haven asset.
In contrast to this, the hopes surrounding Trump's expansionary policies could lead to inflation, prompting the Fed to adopt a less dovish stance. This may limit gold's gains, as rising rates reduce its appeal as a non-yielding asset.
Gold Gains Support from Weakened US Dollar and Global Economic Uncertainty
On the US front, there are no Federal Reserve (Fed) speakers this week due to the media blackout, so all attention is on the US economic data.
On the data front, US Nonfarm Payrolls (NFP) data, released last Friday, showed a strong increase of 227,000 jobs in November, far above the revised 36,000 in October and exceeding expectations of 200,000. However, the Unemployment Rate rose slightly to 4.2% from 4.1% in October.
Despite the stronger job growth, financial markets are now pricing in a 70% chance of a 25 basis point rate cut by the Federal Reserve at its December 17-18 meeting, following a series of comments from Fed officials who noted that while the labor market is cooling, it remains healthy.
However, the US dollar dropped after the NFP data, reflecting concerns over a possible rate cut. This reaction indicates that investors are betting on the Fed lowering rates soon, which would likely impact the value of the Greenback.
Therefore, the recent labor market data showed strong growth but also pointed to a slight increase in unemployment, signaling some softening in the economy. As a result, the outlook for the US Dollar will depend on upcoming economic data and the Fed’s policy stance on interest rates.
On the other hand, China’s National Bureau of Statistics (NBS) released inflation data for November. The country’s Consumer Price Index (CPI) rose year-on-year but saw the smallest increase in five months, mainly due to lower travel demand and warmer weather.
Meanwhile, China’s Producer Price Index (PPI) showed signs of improvement, reversing its decline from the previous month and narrowing its year-on-year drop. Core CPI, excluding food and energy, continued to rise, indicating steady underlying inflation pressures.
Hence, the mixed US labor market data and Fed rate cut expectations weakened the US Dollar, supporting gold as a safe-haven asset. Meanwhile, China's improving PPI and steady core inflation suggest economic stability, further boosting gold's appeal amid global uncertainties.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,644.26, up 0.42%, maintaining its bullish momentum above the pivot point of $2,635.82. The 50-day EMA at $2,642.45 aligns closely with the price, reinforcing a short-term bullish bias.
Immediate resistance is observed at $2,666.85, followed by $2,688.97 and $2,707.52, indicating potential upside if momentum sustains.
On the downside, immediate support is situated at $2,617.61, with additional safety nets at $2,595.99 and $2,575.78.
The RSI at 53 signals neutral momentum, providing room for further gains without entering overbought territory.
A break below $2,635.82 could challenge the bullish structure, but maintaining above this level keeps the focus on upward targets.
Traders should monitor the $2,666.85 resistance closely, as a breach could accelerate gains toward $2,688.97. Conversely, a move below $2,617.61 could attract selling pressure, targeting lower supports.
Current market sentiment suggests a cautious yet optimistic outlook, driven by technical stability and broader macroeconomic factors.
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