As global markets navigate pivotal economic data releases and central bank decisions, attention centers on critical indicators shaping currency and commodity movements. Japan, the UK, and the US unveil monetary policy updates and labor market metrics, while retail sales data from the UK and Canada, alongside the US Core PCE Price Index, provide insight into consumer trends and inflation trajectories.
In parallel, gold's trajectory remains a focal point, marked by technical and fundamental signals of volatility. Following a significant pullback from its October peak, the metal faces downward pressure amid stronger dollar dynamics and elevated Treasury yields. However, shifting inflation expectations and upcoming economic data may offer moments of relief, underscoring the interplay between policy, data, and market sentiment.
Overview
As global markets navigate pivotal economic data releases and central bank decisions, attention centers on critical indicators shaping currency and commodity movements. Japan, the UK, and the US unveil monetary policy updates and labor market metrics, while retail sales data from the UK and Canada, alongside the US Core PCE Price Index, provide insight into consumer trends and inflation trajectories.
In parallel, gold's trajectory remains a focal point, marked by technical and fundamental signals of volatility. Following a significant pullback from its October peak, the metal faces downward pressure amid stronger dollar dynamics and elevated Treasury yields. However, shifting inflation expectations and upcoming economic data may offer moments of relief, underscoring the interplay between policy, data, and market sentiment.
Key Economic Events
Thursday Tentative (GMT+2) - Japan: BOJ Policy Rate (JPY)
Thursday 14:00 (GMT+2) - UK: Official Bank Rate (GBP)
Thursday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+2) - UK: Retail Sales m/m (GBP)
Friday 15:30 (GMT+2) - Canada: Retail Sales m/m (CAD)
Friday 15:30 (GMT+2) - USA: Core PCE Price Index m/m (USD)
Technical Analysis
Since reaching an all-time high of 2789.99 on October 31, gold has been moving sideways while showing increasing downward momentum. The precious metal has experienced a decline of over 9%, forming a chart reversal known as a failure swing in technical analysis. Specifically, the peak at 2710.33 failed to surpass the previous peak, and prices subsequently fell below the support level of 2643.05, paving the way for further reductions.
Additionally, gold prices dropped below the 50-period Exponential Moving Average (EMA), which intensified the downward momentum. Although there was a rebound from the lows, gold continues on a downward trajectory, with key technical indicators supporting a bearish outlook. Prices remain below the 50-period EMA, indicating a downtrend. Both the Momentum Oscillator and the Relative Strength Index (RSI) further reinforce this downward movement, with the momentum oscillator dropping below the 100 threshold and the RSI being below the 50 baseline, confirming the overall downward trend.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
2667.31: The initial resistance is 2667.31, which represents the weekly Pivot Point, PP, calculated using the standard methodology.
2726.15: The second price target is identified at 2726.15, corresponding to the peak marked on December 12.
2789.99: The third target is established at 2789.99, which aligns with the all-time high that was reached on October 31.
2875.08: An additional price target is estimated at 2875.08, which corresponds to a weekly resistance, R2, calculated using the standard Pivot Points methodology.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
2605.26: The initial support level is estimated at 2605.26, which corresponds to a trough formed on November 26, along with weekly support, S1, and the 50-period Exponential Moving Average.
2536.79: The second support level is determined at 2536.79, reflecting the swing low from November 14.
2477.67: The third support level is seen at 2477.67, corresponding to the swing high from August 2.
2424.42: An additional downward target is observed at 2424.42, corresponding to the monthly support, S2, estimated using the standard Pivot Points methodology.
Fundamentals
Gold prices dropped to a one-month low after the Federal Reserve announced another interest rate cut but signaled a slower pace of easing in 2025. Treasury yields and the dollar surged following the decision, pressuring gold prices, which fell 1.5% to $2,606.03 an ounce. Fed Chair Jerome Powell emphasized caution in future policy adjustments, citing stagnant inflation and uncertainty over the potential economic impacts of the incoming administration's trade policies. The shift prompted profit-taking among speculators, with analysts noting increased competition from fixed-income investments. Other precious metals, including silver, palladium, and platinum, also declined.
Traders are closely watching US economic data, including third-quarter GDP and unemployment claims, alongside the PCE index, the Fed's preferred inflation measure. A slowdown in inflation could offer gold some modest support by reducing dollar strength, though significant shifts in Fed policy are not expected.
Conclusion
In conclusion, the interplay between pivotal economic data, central bank policies, and market sentiment continues to shape the outlook for gold and broader financial markets. With technical indicators signaling downward momentum for gold and fundamental pressures from a strong dollar and elevated Treasury yields, the short-term outlook remains bearish. However, upcoming economic releases, particularly inflation metrics like the PCE index, may provide crucial insights that could influence market dynamics and offer opportunities for stabilization or shifts in sentiment. As traders navigate this landscape, vigilance remains essential in anticipating the potential impacts of policy adjustments and macroeconomic trends.