Gold poised for deeper correction under $2000

2023-12-13
Summary:

Gold struggled as US consumer prices rose in November. Market eyes are on central bank meetings for 2024 interest rate clues.

Gold prices struggled on Wednesday as US consumer prices rose in November, while market focused on key central bank policy meetings for clues on interest rate path for 2024.

The headline inflation rose 3.1% last month year on year, in line with economists' expectations, and edged up 0.1% on a month-on-month basis. That does not justify an early rate cut.


The Fed is widely expected to leave rates unchanged this week, with about an 80% chance of a rate cut in May, CME FedWatch Tool shower. FOMC members will also release their economic projections.


Wall Street thinks the committee could drop its reference to more tightening but Powell may push back on aggressive rate cut bets afresh. The dollar and Treasury yields are expected to steady.


SPDR Gold Shares ETF posted net inflows of over $1 billion in Nov, the strongest month of inflows since March 2022, snapping a five-month streak of outflows.


Gold has fallen as much as around $150 from a record high it hit earlier this month. Even so it still notches a gain of over 8% this year due to easing inflation across major economies.

XAUUSD

The precious metal now trades in a support area above $1970 and the next level to watch is its 200 SMA around $1950. We suggest traders sell the rally at present.


The index is in a rising trend channel in the long term but RSI above 70 means it could face an imminent correction. As long as the 4500 level holds, US equities should have further to go.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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