Gold Prices Dive After the Fakeout Last Week

Gold prices opened last week with a boom as they surged to new record highs after breaking the previous one but closed it on a bearish note, closing very close to $2,000. Yesterday Gold started the week with the same gloomy tone that it closed the week on Friday and fell below $1.980, with sellers remaining in total control.

The positive US Nonfarm Payrolls (NFP) report on Friday showed some strong numbers, with the unemployment rate declining from 3.9% to 3.7%, undoing the softer JOLTYS and ADP employment figures we saw early last week. So, the NFP report lowered investors’ hopes for a Federal Reserve (Fed) rate reduction in early 2024, giving a lift to US yields and the USD, while Gold which offers no yields slipped $30 lower.

The selloff in Gold continued yesterday, as geopolitical concerns and prudence ahead of this week’s crucial economc data and central bank events restrained trading activity. The last two trading days in particular have been very bearish, with two massive bearish candlesticks, taking the price more than $50 down.

Gold Daily Chart – Sellers Are Back With A Vengance

Over the weekend we saw some disappointing consumer inflation statistics from China which turned investor confidence shaky yesterday, which in fact should have helped GOLD prices in normal times, but Gold is rarely acting as a safe haven now. The CPI came at -0.5% while PPI producer inflation came at -3.0%, indicating the slowest increase in three years, sparking fears that later today, so not much is expected until then in terms of price action the world’s second-largest economy’s uncertain status may slow global development next year.

However, with inflation moving in the right direction, the overwhelming narrative across the market is that the FED will have to cave in and cut rates in support of worsening market conditions. Anyway, markets are waiting for the US CPI print. A softer-than-expected figure is likely to extend dovish expectations which could weigh further on the dollar, potentially providing a tailwind for gold prices

Gold XAU Live Chart