On Friday, December 5, during the early Asian session, spot gold continued its recent trend of narrow-range consolidation with muted volatility. On Thursday (December 4), spot gold edged up 0.14% in choppy trading. While intraday swings were not drastic, they reflected market caution—gold dipped to around $4,175, signaling short-term selling pressure, but rebounded to a high of $4,219, indicating persistent buying interest, ultimately settling at $4,208/oz.
Key Drivers: U.S. Treasuries and the dollar are counterbalancing each other. Rising 10-year Treasury yields pressured gold as higher yields attract capital to bonds, dulling gold's appeal. Meanwhile, the dollar index hit a one-month low, and despite a minor rebound, its overall weakness provided a cushion for gold. These opposing forces kept gold range-bound.
Yesterday’s unexpected drop in U.S. initial jobless claims to 191K—a three-year low—defied economists’ forecasts of 220K. The 27K decline eased fears of a sharp labor market downturn. Though initially bearish for gold, prices later recovered and even rose, suggesting limited market reaction to the data.
Fed rate-cut expectations saw slight adjustments: CME’s FedWatch Tool shows an 87% chance of a 25bps December cut, down from 89% the prior day. Internal Fed divisions persist, with 5 of 12 voting members opposing or doubting further cuts, while 3 lean supportive. This uncertainty has left gold lacking clear directional momentum.
Technically, gold’s daily chart shows yesterday’s retreat held above the 10-day MA at $4,175, aligning with our bullish outlook. The doji close confirms consolidation, reflecting fading but not exhausted bullish sentiment, while bears lack conviction. Consecutive dojis signal a stalemate, with external catalysts like tonight’s PCE data potentially breaking the deadlock. The report may refocus markets on Fed policy, triggering volatility.
The hourly chart shows continued consolidation within a narrowing triangle, possibly anticipating PCE. Key levels to watch: support at $4,180-75 and resistance at $4,220-25. Intraday trading suggests light-positioned high-low plays within this range, pending PCE’s impact. As today marks the week’s final session, caution is warranted around the data release.
Gold’s recent range-bound action reflects a tug-of-war between resilient economic data and policy uncertainty. While near-term moves are muted, strong long-term dip-buying and Fed expectations underpin stability. Markets await September’s core PCE—the Fed’s preferred inflation gauge—which could shape the December 9-10 policy meeting. Until then, gold likely stays range-bound.
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