Gold USD Price Outlook 1st Dec 2024 to 7th Dec 2024
Gold prices are continuing their downward trajectory in North America trading hours, with the precious metal hitting a fresh eight-day low of around $2,615 early on Friday. This drop extends the previous decline, and traders are now bracing for the release of the US Nonfarm Payrolls (NFP) data, which is expected to provide fresh direction for the yellow gold metal.
With the NFP data looming, investors are closely watching market signals that could either exacerbate or stabilize the recent bearish momentum in gold prices.
Dollar Hits New Highs Despite Market Faces Uncertainty
The US Dollar (USD) has found fresh strength in recent days, fueled by a combination of factors that have dampened broader market sentiment. Concerns over political instability in South Korea have added to risk aversion, as the opposition Democratic Party announced plans to put an impeachment motion against President Yoon Suk Yeol to a vote.
Further geopolitical worries have emerged, including potential martial law declarations in South Korea, which have heightened uncertainty across financial markets.
Adding to these geopolitical tensions are concerns about China’s economic slowdown and the ongoing US-China trade dispute, which have undermined investor confidence globally.
As a result, market participants are becoming increasingly cautious, with many opting to reposition their portfolios ahead of the key NFP data release later in the day.
Gold Eyes NFP Data as Key Turning Factor for Gold’s Prices
Economists expect that the US economy added around 200,000 jobs in November, a notable recovery from October’s lackluster job growth of just 12,000, which was influenced by the effects of hurricanes and the Boeing strike.
A weaker-than-expected NFP reading could reinforce the notion that the US labor market is cooling, which in turn could lead the Federal Reserve to consider further rate cuts after its expected reduction in December.
This dovish outlook would likely provide support for gold, a non-yielding asset, as lower interest rates tend to weaken the USD, making gold more attractive to investors.
On the other hand, a stronger-than-expected NFP print would provide additional fuel to the speculation that the Federal Reserve could pause its rate-cutting cycle after December. This would likely strengthen the US dollar, putting further pressure on gold.
As of now, markets are pricing in a 70% chance of a 25 basis point rate cut in December, according to the CME Group’s FedWatch Tool, down slightly from the 75% probability seen earlier in the week.
Gold Remains Unchanged Even with Weakening US Economic Signals
Despite a sell-off in the US Dollar and US Treasury bond yields, gold prices struggled to maintain upward momentum on Thursday.
The release of disappointing US weekly jobless claims data, which showed a rise of 9,000 claims to a seasonally adjusted 224,000 for the week ending November 30, failed to ignite any meaningful rally in gold.
The number of claims exceeded expectations, but the lack of a strong response from gold traders suggests that the market remains focused on the upcoming NFP data.
Bearish Sentiment Dominates
From a technical perspective, gold’s price action continues to show signs of weakness.
The daily chart reveals that the yellow metal has broken through its recent trading range to the downside, and the 14-day Relative Strength Index (RSI) is now firmly below the midline, signaling a bearish bias. The recent “Bear Cross” — when a shorter-term moving average crosses below a longer-term one — continues to act as a headwind for gold.
For gold bulls to regain control, the price would need to recover and sustain above key resistance levels. A daily close above the 21-day Simple Moving Average (SMA) at $2,631 is crucial to mitigate the near-term bearish outlook.
However, if gold fails to reclaim this level, the next major support lies at $2,605, the low from the previous week. Should this level break, the 100-day SMA at $2,583 could provide the next line of defense for gold buyers.
Conversely, any upward movement in gold would face resistance around the 50-day SMA at $2,668. A sustained move above this level would be critical to reversing the short-term negative bias, with the next resistance point located at $2,700. If gold can break through this level, the November 25 high of $2,721 would be the next key target.
Conclusion
As traders wait for the crucial US Nonfarm Payrolls data, the gold market remains at a crossroads. The outcome of the NFP report will be pivotal in determining whether gold prices continue to struggle or find support.
A weak NFP reading could give a much-needed boost to gold, while a strong print could reinforce the bearish sentiment that has been driving prices lower. Until then, gold traders will likely remain cautious, closely monitoring global political developments and the broader market climate for any signs of further turbulence.
