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Summary: Gold prices steadily rose last week, experiencing fluctuations with the release of economic data; however, after a month of strong volatility, the trajectory of gold prices has become more orderly, and less dramatic.

Fundamentals

The latest weekly gold survey indicates that retail investors maintain an overwhelmingly bullish bias this week, while our outlook on the gold price is shifting towards a neutral assessment.

Commodity analysts state that gold continues to be influenced by global geopolitical factors, as diminishing market concerns weaken gold's safe-haven appeal. Despite the ongoing conflict in the Gaza Strip while the war between Israel and Hamas persists, the sustained chaos in the Middle East has come under control.

"The geopolitical crisis that has fuelled gold's rally is becoming exhausted,” said Christopher Vecchio.

Vecchio noted that while geopolitical events can provide tradable momentum for the gold market, they do little to attract long-term investors. He pointed out that gold's rise based on specific geopolitical events requires constant escalation to sustain its safe-haven buying.

Vecchio mentioned that he exited his long gold positions last week and remains cautious in the short term, anticipating a consolidation of gold prices.

He expressed that the majority of significant movements in gold have already taken place, but he has no intention of shorting gold. This is due to the favorable backdrop for gold amid a weakening U.S. dollar and declining bond yields. He believes that gold can continue to rise, but for potential traders, it will be a frustrating ordeal.

In terms of the market, we expect little change in gold prices this week. After the recent rise, gold is susceptible to negative news. The mid-term fundamentals are very strong, and at some point, there may be buying opportunities for gold as the Fed and other central banks relax tightening policies before inflation is thoroughly contained. But it's not the time yet. Meanwhile, as geopolitical risks have subsided, gold prices will enter a prolonged consolidation phase, similar to the challenging period from mid-July to late August.

This week, 12 Wall Street analysts participated in the gold trend survey. Like last week, three experts (25%) expect gold prices to rise next week, but only one expert (8%) predicts a decline this week. The majority (67%) hold a neutral stance on gold for the coming week.

Meanwhile, an online poll generated 595 votes, with market participants showing a more optimistic attitude compared to last week's survey. 394 retail investors (66%) expect gold prices to rise this week. Another 125 respondents (21%) anticipate lower prices, while 76 respondents (13%) maintain a neutral outlook on the near-term prospects of precious metals.

Technical Analysis

Last week's upward movement in gold benefited from a new signal indicating that the Fed's tightening cycle is nearing its end. Despite the constructive nature of the US dollar, both sides need to do more to generate clearer directional signals.

After facing rejection from further gains on last Friday, gold did not continue its upward trend this Monday despite the further weakening of the US dollar, and it exhibited an accelerated downward trend.

A bearish candlestick with a long upper shadow on Wednesday warned of a stalled recovery. Currently, as long as the resistance level at $1,985 holds as the upper limit, the downward trend will remain intact, as the momentum in the daily chart continues to be negative. In terms of trading, going short at highs is recommended as the main strategy.

Trading Recommendations

Trading Direction: Short

Entry Price: 1975

Target Price: 1935

Stop Loss: 1993

Valid Until: 2023-12-04 23:55:00

Support: 1973, 1969, 1966, 1952

Resistance: 1979, 1985, 1988, 1993