Article by: ETO Markets
As compared to October's 49.5 contraction, China's official Manufacturing Purchasing Managers' Index contracted more in November, with the most recent data released by the National Bureau of Statistics of the nation on Thursday showing 49.4 as the contraction. The reported month's reading of 49.7 was anticipated by the market.
For the fifth day in a row, the Japanese yen is stronger than the US dollar on Thursday due to predictions that the Bank of Japan would soon abandon its negative interest rate policy. The BoJ board member’s less aggressive comments on Wednesday, however, were mostly ignored by the JPY bulls, who said that the economy is not yet at a point where the central bank could discuss ending its extremely easy monetary policy. In terms of economic data, Japanese Retail Trade for October fell short of expectations, but the disappointment was somewhat mitigated by an improvement in the reading from the previous month and better-than-expected Industrial Production data.
The US Energy Information Administration reported data showing an increase in inventories of 1.6 million barrels, reaching 449.7 million. This was a significant departure from the average prediction of a 933,000-barrel reduction and indicated poor demand. However, significant pulls in other refined goods, such as leftover fuel oil, offset the effect. In the meantime, official statistics from China revealed that factory activity fell in November for a second consecutive month, adding to worries about the world's largest oil importer's economy slowing down.
The mixed underlying background stated earlier is preventing traders from making bold directional wagers on oil prices. Ahead of the US PCE Price Index's release later, market participants also choose to remain neutral. The Fed's preferred benchmark for assessing longer-term inflation trends is the core gauge, which ought to have an impact on the next policy decision. As a result, the US Dollar will rise, and oil prices will be somewhat boosted.
With increasing consensus that the US Federal Reserve will likely switch to a more dovish stance and lower interest rates as early as March 2024, the gold market is excitedly awaiting the Fed's preferred inflation indicator. Markets are pricing in a 49% likelihood of a rate decrease by the Fed in March, even after the third-quarter US GDP data was revised upward.
The objective of the 50-DMA is to achieve a daily close above the 200-DMA, which will confirm the existence of a golden cross. As a result, every decline in the price of gold may be viewed as a favourable purchasing opportunity for a new upward posture. A new upswing toward the $… static resistance will be fuelled by acceptance over the multi-month high of $... The peak of $… will be the next target for gold purchasers.
On the other hand, a test of Tuesday's low of $… is expected to occur below the low of the previous day, which is $…, which represents the immediate support. If one looks further south, the $… barrier might save gold purchasers.
Anticipating a price-supportive settlement and more supply cuts from the cartel prove to be crucial factors supporting the black liquid as we approach the major event risk. According to two OPEC+ sources, the organization was debating a more substantial reduction in global production, with media reports speculating that the reduction would reach one million barrels per day. Nonetheless, one of the sources hinted that OPEC+ might not be able to reach a consensus on this and that the conference might end up simply extending current policy. This prevents any significant increase in oil prices, together with a spike in US crude stockpiles and depressing statistics from China.
The resistance to be aware of is $... If crude manages to break above that mark once more, the next level to watch for selling pressure or profit-taking is $... If oil prices manage to stabilize above that level, the $… mark, which is the topside of this decline, may once again become relevant.
On the downside, traders are observing the formation of a soft floor close to $... This tier serves as the final barrier before diving into $… and below. The next support level to trade at is the triple bottom from June, so keep an eye out for $...
