GOLD Price Analysis – Dec 12, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its early-day bearish rally and remained under pressure around the 2,716 level, eventually dropping to an intra-day low of 2,700.
This decline is mainly driven by the stronger US dollar (USD) following the release of the upbeat US inflation data on Wednesday.
Despite this, the inflation report doesn’t seem to be enough to stop the Federal Reserve (Fed) from cutting rates at its meeting next week.
Traders are now pricing in a nearly 99% chance of a 25 basis point rate cut on December 18, according to the CME FedWatch Tool.
The focus now shifts to the US November Producer Price Index (PPI), set to be released later on Thursday, for further market direction.
Strong US Dollar and Economic Data Weigh on Gold Prices
On the US front, the broad-based US dollar gained strong bullish traction after the release of key economic data. On the data front, the seasonally adjusted Employment Change showed an increase of 35,600 jobs in November, pushing the total number of employed people to 14.54 million.
This was well above the previous month’s increase of 12,100 and also exceeded expectations of 25,000.
At the same time, the Unemployment Rate fell to 3.9%, marking the lowest level since March, and came in below market estimates of 4.2%. These positive employment figures supported the US dollar.
Meanwhile, the US Consumer Price Index (CPI) rose to 2.7% year-over-year in November, slightly up from 2.6% in October. The headline CPI showed a 0.3% month-over-month increase, matching market expectations.
The core CPI, which excludes food and energy prices, climbed 3.3% year-over-year, with a 0.3% month-over-month rise.
Despite these inflation figures, the market believes the Federal Reserve will still proceed with rate cuts in its December meeting.
Traders are currently pricing in a 99% chance of a 25 basis point rate reduction on December 18, according to the CME FedWatch Tool.
Turning to China, President Xi Jinping expressed confidence in achieving China’s economic targets, stating that the country remains a key driver of global growth. He also highlighted that there are no winners in trade or tariff wars.
In November, China’s Trade Balance rose to CNY 692.8 billion, up from CNY 679.1 billion the previous month.
Exports grew by 1.5% year-over-year, a slowdown compared to the 11.2% increase in October, while imports saw a slight recovery with a 1.2% increase.
Therefore, the strong US dollar and positive economic data, including low unemployment and CPI readings, put downward pressure on gold prices.
Market expectations of a Fed rate cut further fueled the dollar’s strength, leading to gold's inability to extend its gains.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,716.48, down slightly by 0.06% as it consolidates within a tight range on the 4-hour chart. Despite the recent dip, the price remains supported by the pivot point at $2,709.80, a crucial level for maintaining bullish momentum.
Immediate resistance is observed at $2,719.88, followed by $2,732.71 and $2,745.77. A breakout above these levels could signal a stronger upward trend, targeting higher levels in the near term.
On the downside, support is visible at $2,699.27, followed by deeper levels at $2,685.98 and $2,675.44. The 50-day Exponential Moving Average (EMA) at $2,674.10 offers robust technical support, reinforcing the broader uptrend.
The Relative Strength Index (RSI) stands at 50.48, reflecting neutral momentum with potential for upside. However, the RSI nearing oversold territory suggests that a bullish reversal may be imminent if support levels hold.
The current setup highlights an opportunity to enter long positions above $2,709, with a target of $2,732 and a stop loss at $2,700 to manage downside risks.
Related News
- AUD/USD Price Analysis – Dec 12, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.