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Fundamentals

During Monday's (December 4th) Asian session, spot gold pulled up rapidly, and it is now trading at $2085. This is also a continuation of last Friday's upward trend, but only a few investors could expect that gold hit a new record high, and the highest price reached $2145! Early in the morning, gold appreciated $70 in only 20 minutes and then fell back in half an hour of $60. The wash trading with these big ups and downs may give an illusion of a huge trading space, but the vital job is to stay safe instead of making profits. What if you misjudge the trend? Paranoid traders may suffer great losses instantly. Many investors might think gold would meet huge resistance this morning after last Friday's surge to a record high, so lots of bears placed stop-loss orders or entered short positions near the record high of $2081. However, gold prices spiked in the morning session. Technically, it was because the stop-loss orders were triggered. Fundamentally, it was due to the market expecting the Fed to cut rates early next year as the recent economic data were weaker than expected. Although Powell gave a hawkish speech last Friday, the market was largely betting on rate cuts and didn't believe the Fed official's hawkish stance anymore. In addition, the Palestinian-Israeli conflict is heating up again after cooling down for some days, so risk aversion is also one of the main factors in shoring up gold. After the surge this morning, many positions have been forced to close. We should not go long at present as we expect the price to fluctuate widely or retreat technically early this week. Keep an eye on the non-farm payrolls data this week.

Data: The ISM announced last Friday was the same as the previous reading (46.7), but worse than the expected 47.6.  

Speech: Powell continued to emphasize the maintenance of tightening policy and explained that a rate cut is still early.  

Today's focus: no key data today, and this week's focus is on the Nonfarm Payrolls and the ADP data.

Technical Analysis

Gold pulled up quickly in the European and U.S. sessions after falling from $2049 to $2033 in the Asian session, once reached $2075 and approached the historical high. Many significant positions are accumulated to prepare the new high for this morning. Moreover, stop-loss orders were removed in the morning session and gold once ascended to $2145 by over $70. Although it is unreasonable, the market should be respected, and gold retraced by $60 immediately. Regarding the trend, gold should keep the bullish trend, and the previous high of $2081 will be turned from resistance to support. Despite a serious bearish divergence in the daily chart and the weekly chart, the top and bottom are still to be decided until the unilateral trend is broken. At present, after falling from highs, the wash trading is enough, and investors should not chase the upward trend even if they keep a bullish view. Additionally, gold may oscillate at highs or even consolidate with a retracement at the beginning of this week, and the essential factor to be considered is the Nonfarm Payrolls. According to the 1H chart, MACD forms a death cross at the overbought area, and there will be retracements today. Meanwhile, the initial support below will be in the range from $2070 to $2080, when further strong support will be at $2050. For trading recommendations, the effective range will start from $2050 to $2100, in which investors could buy low and sell high, and control the stop loss.  

Trading Recommendations

Trading direction: Short

Entry price: 2100

Target price: 2070

Stop loss: 2105

Support: 2081.000/2070.000

Resistance: 2100.000/2145.000