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Summary: Gold prices experienced a decline for the second consecutive trading day on Monday, extending the pullback from the historical highs reached last week. A survey of investors and analysts regarding this week's gold price trends indicates a neutral to slightly bearish sentiment.

Fundamentals

Spot gold retraced most of its recent gains during the first week of December. After reaching a record high of $2,147 during the Asian session on Monday of the previous week, the price of gold steadily declined in the following days, holding near the $2,000 support level.

Despite the recent strong performance of gold prices, the positive momentum was short-lived. Following the release of the November US nonfarm payroll data, gold prices experienced a significant drop. This downward trend continued into Monday of this week.

The latest weekly gold survey reveals that the majority of investors expect gold prices to continue rising this week, while the majority of market analysts have turned neutral or bearish on the short-term outlook for gold.

Mark Leibovit, publisher of the VR Metals/Resource Letter, shifted his outlook on gold for the week from bullish to neutral, citing caution due to the rise in the US dollar following last week's substantial increase. He stated, "With the US Dollar upticking and following last week's blow-off to the upside, I think we have to be cautious here. So, I am voting NEUTRAL for now."

Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, expressed a bearish view on gold for the week. He explained, "The market reaction to today's nonfarm payrolls and wage inflation data pushed up treasury yields and USD while knocking gold back a bit. I think the Fed is going to be less dovish than the street is hoping which may continue the correction in Gold that started after the overnight spike that started this trading week."

James Stanley, Senior Market Strategist at Forex.com, anticipated an increase in gold prices this week. "Gold has had a tendency to set bear traps this year and the reversal seen earlier in the week may be setting up something similar," he said. "If the weekly bar of spot Gold closes below $2k that's going to look like an aggressive reversal candle. But, really, I'm not sure the risk backdrop supports such a thesis at the moment, and there are two major drivers next week with CPI and FOMC, so matters can change quickly."

Stanley stated, "What we have seen so far was bulls showing up with support at or around that $2k level even after the massive reversal move to open the week."

We are shifting our stance on gold from neutral to negative. Despite the optimistic long-term outlook, gold prices are susceptible to negative news after a strong upward movement. Additionally, the unexpectedly positive US official employment data seems to have disrupted the optimism seen in recent reports and reduced expectations of a quick interest rate cut.

We believe there is further downside potential for gold prices, and the price may easily retreat below $1,940. However, the fundamental premise is that faced with economic deterioration and an uncontrollable debt burden, the Fed and other central banks will cease tightening, and inflation will remain stubborn, which is highly favorable for gold.

This week, 15 Wall Street analysts participated in the gold survey, with only 3 experts (20%) expecting an increase in gold prices. Eight analysts (53%) predicted a decrease in gold prices, while the remaining four experts (27%) maintained a neutral stance on this week's gold prices.

Meanwhile, an online poll received a total of 729 votes and still holds a bullish outlook for the coming week. 428 retail investors (59%) expected gold prices to rise next week. Another 167 respondents (23%) anticipated lower prices, while 134 respondents (18%) held a neutral outlook on the short-term future of gold prices.

Technical Analysis

From a technical standpoint, most observers are in a neutral to bearish stance, and we share the same position, although it's not our preferred scenario. We would prefer to see gold prices forming a corrective structure this week, but the technical patterns do not support this.

Technically, the breakdown of the $2,012-$2,010 range last Friday is considered a new trigger for bearish trades. Additionally, the appearance of a death cross signal in the 4-hour structure is another factor contributing to further intraday declines in gold prices. This has resulted in the loss of positive traction in the daily structure, further pushing the prospects for additional downside.

The market's current focus is on the $2,009 level. If the price fails to break above this level during the New York session or in the next two trading days, it implies a continued shift towards the downside, with a target range of $1,950 to $1,940.In terms of trading strategy, it is recommended to go short at highs.

Trading Recommendations

Trading Direction: Short

Entry Price: 2000

Target Price: 1938

Stop Loss: 2012

Valid Until: 2023-12-25 23:55:00

Support: 1986, 1975, 1965, 1955

Resistance: 1997, 2000, 2007, 2009