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Fundamentals

During the Asian session on Tuesday (December 12), spot gold rose slightly and is currently trading around $1985. Yesterday, gold prices rebounded weakly in the Asian session, only rising to $2008 before fluctuating downward below $2000. In the U.S. session, gold prices extended the decline to the $1976 level and finally closed slightly above $1980. Gold was weak throughout the day as the market's deviated expectations were corrected. Yesterday, the profit margin of going short was $20, but going long at low suffered a small loss of $5. The overall profit was acceptable. Today, the U.S. CPI data will be released. Inflation is expected to be lower as crude oil prices have been declining recently. What's more critical is the Fed's interest rate decision to be published in the early hours of Thursday as well as the latest dot plot, which will play a decisive role in the future interest rate path. The market is pricing in a larger-than-expected rate cut next year. As the U.S. economic data has shown clear signs of a slowdown since November, perhaps the Fed will be more dovish. However, it may not release a dovish signal to make the market expect excessive rate cuts. At present, the probability of an interest rate cut in March next year has dropped significantly, but regardless of what kind of decision and dot plot are published, the market will price in again. Trading before a trend is formed is one trading logic, and the trend will not end in a day. For gold prices, we should focus on the first support near the 1965 level, and further support near 1935. If gold falls deep into this area, no matter what kind of dot plot appears, next year's trading is destined to follow the logic of interest rate cuts. Then, gold prices may have fall enough. It will be a good opportunity to gradually build up long positions.

Data: Nonfarm payrolls rose by 199,000 in November, beating expectations of 180,000. The unemployment rate fell from 3.9% to 3.7% and the labor force participation rate rose to 62.8%, indicating that the job market remains strong.  

Today, investors need to pay attention to the US CPI tonight, Thursday's retail sales data, and the Fed's interest rate decision in the early hours of Thursday morning, which will include economic forecasts and dot plots.  

Technical Analysis

Gold prices fell in a weak pattern in the Asian session last trading day, and came under pressure at the 2008 level. In the American session, gold prices fell sharply, once falling to 1976, and finally closed a full bear candle. Yesterday gold prices returned to the first support in the 1986-1990 area as shown in the chart below, but obviously, there are no signs of a rebound. Next, the second support area will be the 1935-1942 zone, which is the bottom of the local double-bottom pattern, where the strength is more reliable. However, before the gold price reaches this position, it is still difficult to change the weakness and bears will remain prevailing. The price in the 1-hour chart is still hovering in the oversold area and has formed a golden cross, so an hourly rebound is possible today. Initial resistance can be seen in the 1986-1990 area, and further resistance may be at the 2000-2009 area. Today, investors should continue to make range trading, and the reference range is 1965-2000 where you can buy low and sell high.

Trading Recommendations

Trading Direction: Long

Entry Price: 1965

Target Price: 2000

Stop Loss: 1960

Support: 1965.000/1950.000

Resistance: 1986.000/2009.000