Gold Market Analysis: Dollar Rebounds, Gold Undergoes Profit-Taking Adjustment
Gold prices fell on Thursday, December 28, after earlier hitting a three-week high of $2,088.29. The price closed down 0.4% at $2,069.79 per ounce. The intraday rebound in the US dollar and US Treasury yields triggered some profit-taking in gold. The US Dollar Index rose 0.3% on Thursday, and the benchmark 10-year Treasury yield also increased, moving away from its lowest level since July. The recovery in the dollar prompted some profit-taking in gold, temporarily dampening the upward momentum. However, market expectations of interest rate cuts next year seem firmly entrenched. At its last meeting of 2023, the Federal Reserve acknowledged slowing inflation and confirmed no rate hikes in 2024, while hinting at a 75-basis-point easing policy. Since then, the market has already priced in rate cuts in March and May. Furthermore, last week's US Personal Consumption Expenditures (PCE) price index (the Fed's preferred inflation gauge) fueled dovish bets. Further evidence of a cooling economy weighed on the dollar, leading to selling pressure over the past few trading days. Entering 2024, if the Fed achieves a soft landing in balancing inflation control and economic growth, gold's volatility may be less pronounced. However, if the US economy shows signs of recession, expectations of rapid rate cuts will likely increase, further boosting gold's appeal. Technically, observing the hourly gold chart, yesterday's price action saw a rise followed by a fall, encountering resistance at the $2,088 level before retreating to the $2,064 level in the evening. The short-term MACD is currently below the zero axis, undergoing a consolidation phase. However, from the daily chart perspective, gold prices are still supported by the 120-day and yearly moving averages, maintaining an overall upward trend. The lower support zone has shifted to between $2,040 and $2,060, with stronger support at $2,020. A break below $2,020 could weaken the bullish outlook for gold.
Time:
2023-12-30 09:28
Gold prices fell on Thursday (December 28), after earlier hitting a three-week high of $2088.29. The price closed down 0.4% at $2069.79 per ounce. The intraday rebound in the US dollar and US Treasury yields triggered some profit-taking in gold.
The US dollar index rose 0.3% on Thursday, and the benchmark 10-year Treasury yield also increased, moving away from its lowest level since July. The dollar's recovery led to some profit-taking in gold, temporarily dampening the enthusiasm for gold's rise. However, market expectations of interest rate cuts next year seem firmly entrenched. At its last meeting of 2023, the Federal Reserve acknowledged slowing inflation and confirmed that it would not raise interest rates in 2024, while hinting at a 75-basis-point easing policy. Since then, the market has already priced in rate cuts in March and May. Furthermore, last week's US Personal Consumption Expenditures (PCE) price index (the Fed's preferred inflation gauge) fueled dovish bets. Further evidence of a cooling economy weighed on the dollar, leading to selling pressure in the past few trading days. Entering 2024, if the Federal Reserve can achieve a soft landing in balancing inflation control and economic growth, gold's volatility may not be so intense. However, if the US economy shows signs of recession, expectations of rapid interest rate cuts will increase, and gold's attractiveness is likely to further increase.
Technically, observing the hourly chart of gold, yesterday's price action saw a rise followed by a fall, encountering resistance at the $2088 level before falling back to the $2064 level in the evening. The short-term MACD is currently below the zero axis, undergoing a consolidation phase. However, from the daily chart perspective, gold prices are still supported by the 120-day and yearly moving averages, and the overall upward trend remains unchanged. The lower support area has shifted to between $2040 and $2060, with stronger support at $2020. A break below $2020 could weaken the bullish outlook for gold.
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