{x} | Trading.live

Fundamentals

During the Asian session on Thursday (December 14), spot gold continued to move higher and is currently trading around $2032. The Fed again paused interest rate hikes as expected in its interest rate decision announced Wednesday. Powell's dovish statement exceeded market expectations. He abandoned expectations management and said that interest rates might have been close to the peak. At the same time, he acknowledged for the first time that inflation and the economy are slowing, and began to discuss interest rate cuts. The dot plot shows that there could be three rate cuts in 2024. As a result, the US dollar fell sharply while gold prices were boosted. The Asian session's price movements were like an electrocardiogram of an 80-year-old man, but after the results were announced, the price soared in the night session, closing with one big bull candle, covering the previous three bear ones! Yesterday, we emphasized that investors should take a rest in the Asian session and wait patiently for the meeting results in the US session before trading. The change in the Fed's stance is a good buying opportunity, and the rising space is considerable. The current market is not focusing on when to cut interest rates, but on how many times and how much rate will be cut. The market is optimistic that there will be five rate cuts next year, by as much as 150 bps, exceeding the dot plot forecasts. That's what the market likes to do, trading before a trend takes shape. Before this optimistic expectation cools down, our trading idea on gold may have to be changed, that is, to focus on going long after retracements. Gold prices are destined to be volatile after a rapid surge. Investors should not chase the rise, but should wait for gold prices to pull back before going long.

Data: US core PPI slowed more than expected to 2% in November, hitting a three-year low. The PPI rose 0.9% YoY, which is the lowest level since June.  

Interest rate decision: The decision maintained the interest rate unchanged, but the dot plot released at the meeting showed that the Fed would cut interest rates three times next year and the federal funds rate will end at 3.75 or 3.50%.  

Today, investors need to pay attention to the US retail sales MoM and YoY for November, as well as U.S. initial jobless claims.  

Technical Analysis

Yesterday, gold prices fluctuated in a narrow range around the $1980 level in Asia. Until the US session when the results of the meeting were announced, gold prices quickly surged from around 1980 to above 2000, and then continued to rise. Finally, gold prices closed at 2027, ending the weakness of the previous 3 days with a long bull candle. Bulls took the lead again. Perhaps all the previous pullbacks are for gold prices to take off again, which once again verifies our judgment that the pullback is not a bearish trend. From a technical view, after yesterday's rise in the 1-hour timeframe, the MACD golden cross has widened and approached the overbought area. Gold prices have reached an stable range around 2030 after the pullback in early December. The price is expected to mainly swing in the hourly chart. The 4-hour MACD golden cross began to widen, and there is still more upside space above. The initial resistance is in the 2050-2052 area. On the daily chart, the MACD lines stick at a high level and has a signal of forming a golden cross. However, as gold prices move higher again, signs of bearish divergence have gradually appeared, which will limit the upside. Today, investors can trade in the range from 2018 to 2052, where aggressive traders can buy low and sell high.

Trading Recommendations

Trading Direction: Long

Entry Price: 2018

Target Price: 2052

Stop Loss: 2015

Support: 2018.000/2000.000

Resistance: 2052.000/2080.000