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 price of yellow metal is moving cautiously since US Treasury bond yields have stopped falling. Nonetheless, a stable US dollar seems to provide some support for the price of gold. The weekly Jobless Claims report from the US may provide gold traders with some new trading incentives. The gold price may continue to be sustained in the face of growing expectations that monetary policy will loosen globally in 2019.
The 4-hour chart shows that the price of gold is continuing to rise despite under persistent selling pressure close to the 50-SMA at $... If the 20-SMA's projected trajectory is realized, it will confirm a bear cross by passing through the 50-SMA from above. The ascending 100-SMA at $…provides immediate support; a decline below this level will put the $… barrier in jeopardy. On further losses, gold sellers will aim for the 200-SMA around $...
As an alternative, purchasers of gold must establish a firm position close to the $… area, where the 20- and 50- SMAs congregate. A strong break above the latter will test the psychological barrier of $… and the threshold of $...
As worries grow, oil prices continue to be cautious, driven by China's economic recovery, one day after rating agency Moody's downgraded China's A1 rating from stable to negative. Oil traders would be watching the release of the Balance of Trade report, which would provide more information from China in the interim.
The daily chart shows WTI in a downtrend, fully controlled by bears, having broken through the low of $… from the previous year, which has allowed for additional downward. The next demand area would be the daily low of June 28 at $…, and the most recent swing low, the daily low of June 12 at $... Eliminating those levels will reveal the $… year-to-date low. Conversely, a bounce back over $… might allow for a test of the daily low of $… set on November 16.
