Article by: ETO Markets
The price of gold holds above the psychological support level of $2,000 during Thursday's early Asian session. The yellow metal receives some support from the expectation that the Federal Reserve will lower interest rates in March 2024.
For the third day in a row, the US dollar index, which measures its value against a weighted basket of currencies used by US trading partners, climbs above 104.15. On the other hand, US Treasury yields are gradually declining; the 10-year yield fell from 4.20% to 4.11%.
The November ADP private payrolls increased by 103,000 from the prior estimate of 106,000, which was less than the market's predicted increase of 130,000, according to data released on Wednesday. The Labor Department's October JOLTS job vacancies statistic, which fell to 8.73 million from a downwardly revised 9.35 million in September, represents the lowest level of employment since March 2021. The ADP report was released on Thursday.
In addition, Moody's cut its outlook on Tuesday from stable to negative for China's government credit ratings. That being said, as China is the world's largest consumer of gold, a negative outlook for its economy affects commodity sentiment and poses challenges to the price of gold.
The European Central Bank is expected to lower rates in 2024, ahead of the Federal Reserve, which has put pressure on the EUR/USD recently. Even after weaker-than-expected US data came out on Wednesday, the pair remained unchanged. Compared to the US, the German 10-year bond yield decreased more.
The Eurozone's retail sales data for September increased by 0.1%, less than the 0.2% market forecast. However, there was good news: the August figures were revised down from -0.3% to -0.1%. Germany's Factory Orders fell by 3.7%, compared to a flat reading that was anticipated. These figures add to the growing anticipation of ECB easing.
The 4-hour chart shows that there may be more decline because the EUR/USD pair is still in a downward channel and is not close to the lower barrier. The bearish pressure would lessen if there was a break over …, but the short-term bearish bias would still need to be eliminated if the pair rose above ... A definite break below … might find support at …, and a brief upswing could come after.
Board members of the Bank of Japan recently brushed down rumours of an impending change in the organization's policy position. This could prevent aggressive wagers by JPY bulls and provide some support for the USD/JPY pair ahead of Friday's Non-farm Payrolls report, which is a significant source of US monthly employment data. Meanwhile, traders will be watching for clues on Wednesday from the regular Weekly Initial Jobless Claims data release, which should provide some momentum along with the general risk attitude.
Bearish traders benefit from this week's repeated failures to break back above the 100-DMA support breakpoint, which has now turned into resistance and is currently located around the … region. Any further loss, however, is probably going to find some support in the vicinity of the … zone, below which spot prices may retrace to a multi-month low that was struck on Monday, around the … range. The latter should serve as a crucial turning point because it aligns with the 38.2% Fibonacci retracement level of the July – October rise.
