On Tuesday, the price of spot gold slightly fell by 0.2%, closing within the range of $2640 per ounce, pressured by multiple factors. Strong job vacancy numbers from the US labor market further supported the strengthening dollar, exerting pressure on gold prices which are denominated in dollars. Meanwhile, market expectations of a rate cut by the Federal Reserve in December also experienced fluctuations, limiting gold's gains.
According to data from the U.S. Bureau of Labor Statistics (BLS), the number of October JOLTS job openings increased to 7.744 million, exceeding the market expectation of 7.48 million and surpassing the revised September figure of 7.372 million. This data release reinforced views of a robust US economic recovery and fueled further strengthening of the dollar. Consequently, gold prices came under pressure, giving up some of the gains previously driven by Federal Reserve officials' statements.
Earlier, remarks from Federal Reserve officials sparked market expectations of a possible rate cut in December, which typically favors an increase in gold prices as the opportunity cost of holding non-yielding gold is reduced. However, strong employment data introduced uncertainty into expectations for a rate cut by the Fed, thereby limiting the upside potential for gold prices.
Recently, Federal Reserve officials have leaned towards supporting the possibility of a rate cut in December. Statements from Atlanta Fed President Bostic and Fed Governor Waller showed support for further rate reductions. Meanwhile, New York Fed President Williams, while maintaining caution, also noted that rates need to be further lowered to balance the risks of inflation and employment. Additionally, the Chicago Mercantile Exchange's FedWatch tool indicated that market expectations for a 25-basis-point rate cut in December have risen from 60% to 72.5%.
Although a stronger dollar and interest rate expectations are pressuring gold, geopolitical risks continue to provide support. Ongoing conflicts in the Middle East, the outbreak of the Syrian civil war, the escalation of the Ukraine-Russia conflict, and political turmoil in France all continue to drive demand for gold as a safe-haven asset. Investors are shifting funds towards gold to hedge against risks from global political uncertainties.
From a technical analysis perspective, gold prices are oscillating near the main trend line, exhibiting a range-bound pattern. The market is observing a potential three-wave "Measured Move" pattern in gold. Should this pattern materialize, the next wave could be a downward "wave C," with a target price possibly nearing $2550.
If gold prices fall below $2605 (the low point on November 26), it would confirm a subsequent downward trend, with a target price potentially approaching $2550. Additionally, the MACD indicator recently crossed below the red signal line and entered negative territory, signaling a bearish trend and supporting the view of a potential short-term decline in gold prices.
