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Fundamentals

During Monday's (December 11th) Asian session, spot gold pulled up slightly, and it is now trading at $1996. Last Friday night, the released non-farm payrolls data greatly exceeded expectations, and strong employment data weakened the urgent need for the Fed to cut interest rates, beating down the market's optimistic expectations again. Now, the market expectation of the Fed's first interest rate cut postponed to May. The gold price descended as expected, once falling below $2000. For the whole week, gold depreciated sharply by $140. Last week, we emphasized that the market sentiment was overly optimistic, and interest rate expectations needed to be adjusted and corrected. Moreover, a bearish divergence signal appeared, so investors should go short at highs to achieve good profits for the week. For the future, I don't think gold will enter the bear market despite last week's plunge. On the contrary, the bullish trend is obvious. Last week's retracement will support a better rise. The only job for us is to catch the chance. In trading, we cannot be bigoted, ans should not do short-term trades based on a long-term view as trading is present-oriented! In the medium and long term, gold prices are still expected to rise, but as we always emphasize, the market's short-term reaction is more aggressive. After expectations are dampened, the bearish trend will still last for a while. In addition, a bearish candle covered a bullish candle last week, so gold may still stay in a bearish trend this week. Nevertheless, we need to pay attention to Tuesday's CPI data and Thursday's Fed's interest rate decision and focus on whether $1950 will be broken before the data is released. If the data weighs on gold prices, we need to pay attention to the support at $1950. Otherwise, the gold price will rebound to test the resistance at $2009 first, and the further resistance is at $2035.

Data: The November non-farm payrolls increased by 199,000, exceeding the expected 180,000. At the same time, the unemployment rate fell from 3.9% to 3.7%, and the labor force participation rate increased to 62.8%, indicating that the job market remains strong.

Today's focus: Tuesday's U.S. CPI, Thursday's retail sales data, and the interest rate decision (economic forecasts and dot plot) to be announced on Thursday morning.

Technical Analysis

There was little oscillation during the Asian session last Friday. After ascending to $2034, gold plummeted below $2000 after the employment data was released. Moreover, gold once reached $1995, and then rebounded above $2000 after gaining support, ending the two consecutive gains with a big bearish candle, and returning to a weak pattern. At present, gold fell from highs and lost the previous gain in the weekly chart, indicating a downward bearish signal. Nonetheless, gold showed an oversold pattern in the 1H chart, and the MACD located at the oversold area to form a golden cross, suggesting a possible rebound in the 1H chart today. Thus, investors should focus on the resistance near $2009, and aggressive investors can go short with small positions there. Today, the trading range will be from $1986 to $2009, in which investors can buy low and sell high.

Trading Recommendations

Trading direction: Short

Entry price: 2009

Target price: 1986

Stop loss:  2012

Support: 1986.000/2065.000

Resistance: 2009.000/2035.000