In a strategic pause from its recent correction, gold prices stabilize around the $2,020 mark, displaying resilience after a brief dip from Monday’s record highs at $2,144. As the market focuses on the imminent US ADP Employment Change data, gold benefits from a weakened US Dollar and concerns over China’s economic outlook.
I. Navigating Market Dynamics
The retreat of the US Dollar, influenced by a risk-averse market atmosphere and Moody’s Investors Service downgrading China’s government credit ratings, has spurred a renewed interest in gold as a safe-haven asset. Despite this, the precious metal faces a potential cap on its rebound due to a moderate increase in US Treasury bond yields.
Market sentiments remain uncertain as traders assess the impact of mixed US economic data released earlier this week. The Services PMI indicated a modest improvement in November, but JOLTS Job Openings revealed a concerning decline, signaling potential slackening in the labor market.
II. Eyes on US ADP Employment Change
Attention now turns to the eagerly awaited US ADP Employment Change data, scheduled for release in American trading on Wednesday. This data is poised to offer valuable insights into the current state of the US labor market, setting the tone for Friday’s highly anticipated Nonfarm Payrolls report.
Gold prices will continue to be influenced by the prevailing risk sentiment and its ripple effect on the US Dollar and Treasury bond yields.
III. Charting Gold’s Trajectory
Despite facing challenges, gold remains exposed to upward risks, supported by the Golden Cross and a bullish Relative Strength Index (RSI) on the daily chart. To resume the upward trend, gold buyers aim to surpass the psychological barrier at $2,050 on a daily closing basis, targeting the initial hurdle of $2,100. Further gains could propel gold to retest the all-time highs of $2,144.
Conversely, a renewed correction may find initial support at the $2,000 threshold, with additional assistance from the 21-day Simple Moving Average (SMA) at $1,995. The $1,990 round figure acts as a final line of defense for gold buyers, ensuring a resilient stance in the face of potential downside pressures.