This has been an important piece of news for past 48 hours, as it looks like Gold market has finally decided on the direction it wants to go.
Gold drops after hitting resistance
The gold market rallied quite strongly on Friday, cutting through a bit of resistance. The price broke through a downtrend line, $1810 level, and now looks like it is heading towards $1835. That is moment when trend changes completely. The price is above 200-day EMA, but I will also point out that 200-day EMA is relatively flat. In other words, not much is happening from a moving average point of view.
If price does break above $1835, then I believe gold can continue to race towards $1900. Much of this may have to do with what happens to bond yields, which have had an effect through end of year. Furthermore, it may also have a lot to do with what happens to US dollar, which was hit by a better-than-expected jobs number on Friday. So if there is risk, US dollar is almost always first thing to go. Furthermore, you have to pay attention to fact that gold market is closing at top of the range during session, which usually means there will be a bit of a follow-up.
In addition to all that, you must also note that market is poised to close at top of range at end of week. This means that people are willing to sell gold in next few days, when it is most likely to deviate from them on Monday. In other words, gold looks very strong. This does not necessarily mean that we will easily break through $1835, but it will certainly be tested soon. The pullbacks at this point should be seen as buying opportunities, at least as long as price can sustain above 50 daily EMA, price is currently at $1784. This is a very bullish move. strong in last 48 hours, as it looks like market has finally decided its direction.
EURUSD: Upcoming US Inflation Data
EUR/USD was relatively volatile last week as investors reflected on Federal Reserve’s decision and strong US jobs numbers. On Wednesday, Federal Reserve decided to keep interest rates unchanged between 0% and 0.25%.
The bank has also taken first step towards easing its massive easing program. As decided to start dropping 120 billion dollars per month. That did it by cutting its asset purchase program by about $15 billion a month.
On Friday, US announced its best number of jobs in 3 months. The economy added more than 500 thousand jobs in October, better than adjusted addition in October of more than 312 thousand jobs. The unemployment rate also fell to a pandemic-era low of 4.6%.
Thus, these numbers reinforce the fact that the US economy is doing relatively well and the Fed will continue to tighten.
The next key driver for EUR/USD will be latest US inflation figures to be released on Wednesday. The numbers are expected to show that country’s consumer inflation continued to soar in October. Exactly, analysts expect that Consumer Price Index (CPI) has risen to a multi-year high of 5.8%. However, Fed expects that inflation will start to moderate next year.
Today, there is no important economic data from US and EU. As a result, investors will continue to focus on last week’s employment numbers.
EURUSD remains below 25- and 50-day moving averages even after strong rally it formed on Friday. The Relative Strength Index (RSI) also moved to neutral level of 48.
As such, it is likely that the EURUSD pair will resume its downtrend as bears attempt to move below the support at 1.1500.
Refer to Dailyforex