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Abstract: The price of gold fluctuated sharply this week after it soared to a record high of US$2,147. After the market experienced a strong rise, investors took profits and prices fell sharply. What is important is that the short-term and medium-term tops have been formed.

Fundamentals

After the weekend, on Monday, due to the low liquidity in the Asian market, the price of gold hit an all-time high of about US$2,147 per ounce. Judging from the nature of the trend, the soaring gold price looks more like the market imbalance caused by the seller's stop loss being triggered than finding a stable balance between supply and demand, because the price continues to fall after leaving a long upper shadow.

It fell to US$2,060 in the European session and US$2,030 in the New York session. In less than a day, gold prices fluctuated by US$128, leaving Monday's close further away from record highs than Friday's close. Essentially similar to the change in market sentiment, a bearish engulfing pattern developed.

Bearish factors in the gold market at the start of the week also included a strong rise in the U.S. Dollar Index (USDX), a rise in U.S. Treasury Securities yields, and a weakness in crude oil prices. However, gold prices remained supported by an overall bullish technical structure, continued safe-haven demand, and expectations that major global central banks will exit monetary policy.

Looking at this week, the focus will also be on the U.S. Non-Farm Payrolls data. The data will provide investors with more clues about the next steps in the Fed's monetary policy. If the job market data is upbeat and shows that the labor market remains tight, it could challenge the current market sentiment and trigger new divergences, then the USDX could start to gain momentum, which would limit the upside space for gold prices and trigger another pullback. If the job market data comes in below or in line with expectations, it will still reinforce the view that the Fed has ended its rate hikes and could further push gold prices to rebound.

Technical Analysis

Prices have been in a sharp uptrend since November 10 when gold bounced off the key 200-day SMA. On Monday, gold hit a new all-time high of US$2,147 in a tight liquidity environment before retracing all intraday gains as prices fell back below the previous all-time high of US$2,082.

Given that momentum indicators are starting to ease from the overbought conditions, gold prices could see a further correction. The first target for a pullback is close to the previous starting point of US$2,016. Below that bottom line, prices could challenge the 61.8% Fibonacci level at US$1,976. Even lower, the 50.0% Fibonacci level at US$1,943 could provide downside protection.

On the other hand, the April peak of US$2,082 could be the first line of resistance if bulls try to push prices higher. A break above this resistance could lead to another test of the psychological threshold of US$2,100. If the bulls fail to stay here, prices could re-touch the US$2,135 level, the resistance line of all-time highs.

Overall, the gold price yesterday soared and fell back, recording a giant long upper shadow, strengthening the bearish pressure of the market, coupled with the indicator signal turned weak, suggesting that the trend will be biased towards falling back; however, the market has recently recorded a golden cross between the 50-day SMA and 200-day SMA, which is conducive to the gold price to continue to move upward. The target range is in the US$2,070 to $2,082. It is recommended to buy low and sell high.

Trading Recommendations

Trading direction: Long

Entry price: 2016, 2009, 2001

Target price: 2080

Stop loss: 1996

Deadline: 2023-12-19 23:55:00

Support: 2016, 2009, 2007, 2001

Resistance: 2033, 2042, 2052, 2075