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Fundamentals

In Monday's (November 6th) Asian session, spot gold oscillated narrowly, and it is now trading at 1983. In the second half of last week, the market began to bet on an end of the Fed rate hike, and a series of data also indicated that the U.S. economy is heading for a soft landing. These have brought temporary excitement to the capital markets. We had expected earlier that the strike would have a great impact on the non-farm payrolls. It turned out that last Friday's U.S. non-farm payrolls number for October was lower than expected. As a result, the dollar plummeted more than expected, closing the day with a 20cm bear candle, which excited the whole capital market. Gold prices once surged to $2003 per ounce during the session, but then gave back most of the gains. By the writing time in the Asian session today, the gold price has erased all gains. Overall, it lacks the momentum to rise further. Investors who sold gold at highs last Friday under the weaker-than-expected non-farm payrolls could make good profits. The recent surge in gold prices has been fully priced in geopolitical risk, and the impact of positive factors has also significantly weakened. However, gold prices will continue to be driven by global geopolitical factors. If the gold price can be successfully retraced in place to ease the fear of heights, it will rise further later.

Data: October non-farm payrolls added only 150,000, while the unemployment rate rose to a nearly two-year high at 3.9% with the hourly wage growth slowed to 4.1% YoY. Besides, U.S. October ISM non-manufacturing index unexpectedly fell to a five-month low.  

News: In a press conference after the meeting, Powell demonstrated that the rate hike is ending soon, and the Fed will carefully consider whether it is necessary to raise interest rates again. He also confirmed that a rate cut is not considered currently.

Today's Focus: There is no important data. During the beginning of the week, the market will be affected by the Fed's monetary policy decisions.

Technical Analysis

Gold fell from highs last Friday. We confirmed during last Friday's session that the oscillation would expand when the non-farm payrolls were released in the evening. Thus, investors should wait until gold surges in the European and the U.S. sessions. Those who maintained patience could catch the opportunity. Last Friday, gold reached 2003 for the third time after the release of November non-farm payrolls. Then, combined with the previous high at 1993 and the top at 2009, a head and shoulders top pattern will be formed later. Moreover, we should consider the resistance near 2003, the right shoulder. If it locates below 2003 this week with a decline in gold prices, a bigger plummet can be expected with the first target at 1970 and the second target at 1963. Meanwhile, if gold plunges below the significant support (1950), a turn in the pattern will be confirmed. Nonetheless, after a tremendous retracement in the USD, the oscillation of gold may be reduced at the beginning of the week, and investors could consider a detrended price oscillator. Technically, MACD exhibits clear signals of turning at highs, if the USD rebounds after oversold, the retracement of gold will be sufficient. For aggressive investors, try to go short at highs around the shoulder.  

Trading Recommendations: Sell at highs. If gold ascends to 1995, investors could go short with small positions, and set the stop-loss at 2000. To take profits, the first target will be at 1983, where they can reduce the position size and move the stop-loss to breakeven, and the second target should be at 1970. Meanwhile, if gold appreciates to 2003, investors could stop going short because gold may reach the top later.

Trading Recommendations

Trading direction: Short

Entry price: 1995

Target price: 1970

Stop loss: 2000

Support: 1970.000/1953.000

Resistance: 1997.000/2003.000