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Fundamentals

During the Asian session on Thursday (December 7), spot gold fluctuated in a narrow range and is currently trading around $2028. US ADP employment data released yesterday was weaker than expected, and the trade deficit widened more than expected. After the release, investors didn't trade the ADP data in the US session but remained cautious and waited for Friday's non-farm payroll data. The gold price generally consolidated in a narrow range. In the Asian session, however, gold was volatile. It rallied from $2010 to $2036, the upper edge of our recommended trading range of $2010-$2035. Then it pulled back. As we entered a short position at $2035, we made profits of $10 after the price fell to our first target level of $2025, but it failed to reach our second target level of 2010 and the floating profit was $7 temporarily. The short orders of yesterday can continue to be held, but the take-profit and stop-loss should be set properly. After yesterday's data release, the probability of a Fed rate cut next March is lower but still at 60.9%. The market still has optimistic expectations. The gold price is expected to be relatively stable today, and we should pay attention to the non-farm payroll data, which may be able to guide short-term trading. Yesterday's weaker-than-expected ADP employment data does not necessarily mean weaker non-farm payrolls tomorrow, as these two went in opposite directions several times this year.

Data: US ADP employment increased by 103,000 in November, compared with the expected increase of 130,000. It was the fourth consecutive month of missing expectations. The previous data was revised from an increase of 113,000 to an increase of 106,000. Wages rose 5.6% in November, the slowest pace since September 2021. The US trade deficit in October was $64.3 billion, compared with the expected deficit of $64.2 billion, and the previous reading was revised from a deficit of $61.5 billion to a deficit of $61.2 billion.  

Today, investors need to pay attention to the number of US initial jobless claims and the monthly rate of wholesale sales in October.  

Technical Analysis

Yesterday, gold prices edged higher to $2036 in the Asian session and then fell rapidly to around $2017. After gaining support, gold prices rebounded to around $2025 and finally closed with a small bull candle, which also ended the 2 consecutive declines. The market began to stabilize. Investors who want to go short need to be cautious and should not chase the market to sell low. Instead, they should go short with small positions after a rebound. At the daily level, as the MACD formed a death cross at a high level, the retreat is still not over. However, a golden cross is likely to show in the 4-hour chart. If gold can rebound to around $2052 and form a local head and shoulders top pattern, perhaps the daily pullback will be smoother. The upper edge of volatility range should be higher today. The resistance is near $2041, with further resistance at the shoulder position of $2052. Today's reference trading range is $2017-$2041, and aggressive traders can buy low and sell high in the range.

Trading Recommendations

Trading Direction: Short

Entry Price: 2041

Target Price: 2017

Stop Loss: 2045

Support: 2017.000/2010.000

Resistance: 2036.000/2041.000