XAUUSD waiting for the bullish impulse before entering short!

Dec 11, 2023

The current situation in the gold market depicts a significant downward trend, with prices experiencing a notable drop to around $1,980, marking the lowest level in almost three weeks. This downward movement is largely attributed to the considerable increase, exceeding 1%, in the yield of the US ten-year Treasury bond. Downward pressure on XAU/USD is accentuated by imminent key macroeconomic events expected for this week. The decline in the value of gold on Monday, falling below the $2,000 threshold, follows the release of the US Non-Farm Payrolls (NFP) report. The unexpected strength of the US dollar after the report reflects market participants seeking refuge amid concerns about future monetary policy and its potential impact on the economy. The recent decision of the US Federal Reserve to keep interest rates unchanged, coupled with the acknowledgment that previous measures take time to yield results, suggests a cautious approach. While inflation has moderated since 2022, it remains above the central bank's 2% target. A critical factor influencing inflation is the condition of the labor market. The NFP report, which shows a reduction in the unemployment rate to 3.7% in November, contradicts the need for a more relaxed labor market to curb inflationary pressures. This situation increases the possibility of another interest rate hike, raising the risk of a recession. This week, the United States will release the Consumer Price Index (CPI) for November on Tuesday, followed by the Federal Reserve's monetary policy decision and new economic projections on Wednesday. It will be interesting to monitor the possibility of a false momentum again in the 2000-2020 range, where a short entry could be considered, followed by a liquidity squeeze. I have been advocating for short positions on gold for weeks; I still believe that, in addition to US-related issues, the market is discounting the unwinding of many investor positions. Stay tuned for further updates. Regards, Nicola