The US dollar rose to its highest level since May, dampening demand for gold and causing the precious metal’s price to fall by the most in more than a week.
Spot gold prices stabilized near $3937 per ounce after falling nearly 2% in the previous trading session. The US dollar index rose for the fifth consecutive trading day on Tuesday, posting its best single-day gain since July, as traders reassessed the possibility of the Federal Reserve cutting interest rates again next month. A stronger dollar makes commodities including gold more expensive for most buyers.
Earlier this week, three Federal Reserve policymakers, when weighing the risks posed by inflation and a weak labor market, did not explicitly support further rate cuts in December. Investors will have the opportunity to hear more views this week, as officials such as St. Louis Fed President Alberto Gallo and Cleveland Fed President Beth Hamrick are expected to speak.
So far this year, the price of gold has still risen by about 50%, touching a record high last month before retreating somewhat. This pullback was accompanied by outflows from gold ETFs, although the pace of outflows has slowed in recent days.
Bart Melek, a strategist at TD Securities, said in a report: “It is not surprising that the gold price is consolidating in a lower trading range of $3,800 to $4,050 per ounce.” He listed factors including the uncertain outlook for the Federal Reserve’s interest rate cuts and concerns over Chinese retail purchases.
However, he added that most of the factors that drove gold prices up this year still remain. Strong demand from official sectors and private investors should push gold prices up again after the consolidation stage.
Technical analysis:
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Gold: After the price dropped below the 3960 level, the trend has become weak. However, our long-term bullish determination on the gold price remains unchanged. But in terms of operation, we will cancel some aggressive attempts for the day. We will only retain the attempt to buy after recovering 3950 and confirming a pullback. We will remain on the sidelines at other prices. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq: The impact of the Fed’s reduced expectation of a rate cut in December has ultimately exerted downward pressure on the Nasdaq. However, we do not believe that the price will experience a continuous and significant decline for the time being. We should prioritize observing the support performance in the 25,200/25,400 range. There may be signs of a rebound within the day, but after the rebound, it may consolidate for a period of time. At the same time, it is not ruled out that there will be multiple sweeps of liquidity. Therefore, we suggest that it is advisable to wait and see for the time being. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Favorable news emerged from the OPEC meeting, with the increase in production being less than expected and a suspension of production hikes in the first quarter of next year. Overnight, the price dropped to around 60, driven by declines in related markets. Focus on capturing correction rebounds during the day. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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