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Fundamentals

During Tuesday's (November 7th) Asian session, spot gold oscillated narrowly, and it is now trading at 1975. During the European and the U.S. sessions yesterday, the rebounding USDX and U.S. bond yields suppressed the gold price, and gold depreciated with oscillations to the lowest level at 1977 after surging to 1993. Besides, the trading space is not big, but investors who sell at highs will make profits. The logic of the current market trade transferred to the Fed stopping interest rate hikes in December, which pushes up the overall risk appetite. Then, the U.S. stock market ascended for 7 consecutive days, reflecting a temporary growth during a retracing USD and a slowing debt issuance. Meanwhile, the risk appetite is good in the short term, and the current gold pattern is weak. Thus, gold will decline under pressure, and investors should maintain the bearish view until the pullback is sufficient and the technical indicators ease. Nevertheless, the current fundamentals are complex. On the one hand, the Palestinian-Israeli conflict is difficult to subside in the short term. Unlike the Russian-Ukraine war, the Palestinian-Israeli conflict will not be prolonged under the armistice agreement the United Nations reached. Thus, the war needs a fast end, which means that gold lacks a long-term safe-haven driving factor. On the other hand, the war is at any time possible to expand the scope. If oil-producing countries participate in it, gold will rebound to a new height. Therefore, investors need to maintain a technical view to trade quickly without chasing the trend or being greedy.

Data: The Eurozone Sentix investor confidence index was -18.6 in November. It was expected to be -22.2, compared to a previous reading of -21.9. Moreover, the Eurozone services PMI was 47.8 in October, flat at the initial reading, a 35-month low. Germany services PMI was 48.2 in October with an initial reading of 48. France services PMI's final reading was 45.2 in October, while the initial reading was 46.1.

News: Fed Governor Cook said, short-term policy rate expectations do not seem to promote long-term interest rates. If the commercial mortgage default rate led to a sell-off, commercial real estate prices "may fall sharply". He also insisted that the Fed can not foresee all the risks, but can enhance the resilience to shocks, especially for the large bank's Resilience.

Today's attention: The Eurozone PPI, U.S. Trade and International Transactions for September. More importantly, Fed Chairman Powell and several Fed officials will speak this week.

Technical Analysis

Gold plummeted unilaterally yesterday. It opened at a high at 1993, and dropped with oscillations, closing the daily chart lower and failing to reach the shoulder at 1997. Gold is under a weak pattern and still under 1997. If it fails to rise above at the beginning of this week, gold may retrace to our expected level. Technically, MACD forms a death cross at highs, and the bearish momentum has just begun to release. Furthermore, the Candlestick Chart also suggested a rounding top pattern with any signals for gold to stop falling. Nevertheless, with the trend close to the important support area at 1950, there will be a slight decline in the hourly chart. However, this decline will be small, and investors should catch the opportunity carefully.

Trading Recommendations: Sell at highs. If gold ascends to the range between 1982 and 1986, investors could go short with small positions, and set the stop-loss at 1990. To take profits, the first target will be at 1972, where they can reduce the position size and move the stop-loss to breakeven, and the second target should be at 1965. Meanwhile, if gold appreciates to 1997, investors could stop going short because gold may reach the top later.

Trading Recommendations

Trading direction: Short

Entry price: 1986

Stop loss: 1965

Stop loss: 1990

Support: 1970.000/1953.000

Resistance: 1997.000/2003.000