Gold Dips As Expectation Of Cautious Fed Weigh

Fundamental Analysis

* Fed Watch Uncertainty: Gold prices which traded in U.S. dollars have declined by 3%, marking their steepest monthly drop of 2024. This decline came as expectations of a cautious Federal Reserve strengthened the U.S. dollar, putting pressure on the precious metal. After Donald Trump’s victory in the November presidential election, speculation grew that his proposed expansionary policies might reignite inflationary pressures. Additionally, signs of stalled progress in reducing U.S. inflation in October could deter the Federal Reserve from further easing monetary policy. This scenario may help stabilize U.S. bond yields, supporting the dollar and prompting investors to exercise caution before making bullish bets on non-yielding gold.

Technical Analysis

* Technical Breakout: Gold price was traded lower while currently testing the support level 2625.00. MACD which illustrate bearish momentum signal with the formation of death cross suggest the commodity to likely further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 2550.00 after it breach below the level 2625.00. Conversely, a potential reversal is also to be expected and the price could head back towards 2685.00.

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Potential Risks

Looking ahead, investors will focus on this week’s key U.S. economic data releases, including the ISM Manufacturing PMI, ADP Nonfarm Employment Change, Nonfarm Payrolls, and the Unemployment Rate, to gauge the market’s direction and sentiment.

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Monitoring

Stay updated on US data, global conflict updates, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.