Gold prices underwent significant fluctuations this week due to changes in investor sentiment and key macroeconomic data, challenging previous market assumptions. The recent surge in gold prices was originally based on the belief that post-pandemic inflation would decrease, leading to a pause in Federal Reserve interest rate hikes, and signs of U.S. economic weakness would necessitate the end of the rate hike cycle. However, as economic data indicated that the U.S. economy remained relatively stable, market sentiment shifted. Initially, gold prices reached record highs but declined as investors took profits and expected future rate cuts. Throughout the week, gold prices remained flat, lacking momentum for a quick rebound.
The turning point came with the release of the November Jobs Report, which showed job additions surpassing expectations and a lower unemployment rate. As a result, financial markets revised their expectations regarding the Federal Reserve’s rate hikes, causing gold prices to sharply drop, briefly dipping below $2000/oz before finding support.
Looking ahead, the market is waiting for the Consumer Inflation data, which is expected to play a crucial role in determining the direction of gold prices for the remainder of 2023.
The monthly report indicated that the sell 1 and sell 2 levels are the 2101-2145 target zone. The yearly and monthly seasonal targets have been completed, and there is an expectation for consolidation into the Christmas season, with a potential turning point by December 15, 2023 and the completion of the correction by late December or early January 2024. It is anticipated that once the bottom is completed and the 1970 level holds, there will be a 10-15% rally into the February 24 time frame.
Insight: The fluctuating gold prices indicate investors’ uncertainty about the direction of the market, as they weigh economic indicators such as the Consumer Inflation data. The completion of the correction in late December or early January could potentially lead to a rally in gold prices, presenting an opportunity for investors. It will be essential to closely monitor price trends and key indicators to make informed decisions about trading positions.
As for the upcoming cycle expected on December 15, 2023, it is important for traders to integrate this date into their trading strategy. This date holds potential significance in determining short-term and long-term positions.
The Weekly Standard Deviation Report offers valuable insights into short-term trading opportunities and provides key levels to consider, such as price levels ranging from 1971 to 1920 for realizing short positions. It also emphasizes the importance of utilizing reversal signals and setting specific price levels for initiating and protecting long positions. Additionally, the focus on the upcoming cycle and the strategy for position management underscores the importance of a well-defined trading plan in a fluctuating market.
