GLDM - Gold Price Fluctuations: A Deep Dive Into Recent Market Trends

2023-12-11 15:12:51 ET

Summary

• Gold prices experienced significant fluctuations due to shifting investor sentiment and key macroeconomic data.
• The recent surge in gold prices was based on assumptions of declining inflation and weakness in the US economy, but economic data suggested stability.
• The release of the November Jobs Report caused gold prices to sharply drop, prompting a revision of expectations regarding Federal Reserve rate hikes.

Fundamentals

Gold prices experienced significant fluctuations this week in response to shifting investor sentiment and key macroeconomic data, challenging earlier beliefs in the market. The recent surge in gold prices was based on two key assumptions: a decline in post-pandemic inflation leading to a pause in Federal Reserve interest rate hikes and signs of weakness in the U.S. economy necessitating an end to the rate hike cycle. However, as economic data suggested that the U.S. economy remained relatively stable, market sentiment started to shift.

Initially, gold prices reached new record highs but began to decline as investors took profits and anticipated data that might suggest future rate cuts. Throughout the week, gold prices remained relatively flat, lacking the momentum for a quick rebound.

The turning point came with the release of the November Jobs Report, which showed better-than-expected job additions and a lower unemployment rate. This prompted financial markets to revise their expectations regarding the Federal Reserve's rate hikes, causing gold prices to sharply drop, briefly dipping below $2000/oz before finding support.

Looking ahead, the market is awaiting the Consumer Inflation data, which is expected to play a crucial role in determining the direction of gold prices for the remainder of 2023.

Annual Review

On November 28, 2023, we published our end-of-month update for the benefit of our Investment Group subscribers, and we stated the following:

"It's interesting to note that back in September 2023, we published a comprehensive standard deviation analysis on the yearly trend momentum of the Gold Futures Contract and shared it with our private subscribers of Mean Reversion Trading. In that report, we indicated that the profit realization for long positions or the targets would likely be in the range of 2039 to 2174 levels during the ensuing cycle."

On 12/04/2023, the gold market made a high of 2152, completing the initial target zone, and retreaded to form a weekly key reversal formation to the downside coming down all the way to the extreme below the mean. We saw a $200 dollar historic movie in one day up and down, wiping out stops on the way down, creating a self-fulfilling prophecy of panic selling.

The market continued the decline after a short consolidation and by Friday had made a low of 2010.6 on high volume.

The monthly report indicated and identified the sell 1 and sell 2 levels as the 2101-2145 target zone. The yearly and monthly seasonal targets have been completed. We look for consolidation into the Christmas Season, with a potential turning point by December 15, 2023, and completion of this correction by late December or early January 2024. Once this bottom is completed and the 1970 level holds, we should see a 10-15% rally into the February 24 time frame. Use the 1970 levels and rising as a protected stop and low-risk entry point for long-term bulls.

Where are we going next week?

Let's take a look at the weekly standard deviation report and see what short-term trading opportunities we can identify.

GOLD: Weekly Standard Deviation Report

Dec. 10, 2023 12:01 PM ET

Summary

• Gold futures contract closed above the 9-day SMA, indicating bullish trend momentum for the week.
• Market's closing value fell below the VC Weekly Price Momentum Indicator, confirming bearish price momentum.
• Consider realizing profits if short during corrections at price levels ranging from 1971 to 1920.

Weekly Trend Momentum : The gold futures contract closed above the 9-day Simple Moving Average ((SMA)) in 2012, signifying a bullish trend momentum for the week. If the price were to close below the 9 SMA, it would shift the short-term trend to a neutral position.

Weekly Price Momentum : The market's closing value fell below the VC Weekly Price Momentum Indicator at 2061, confirming a bearish price momentum. Should the closing price rise above this indicator, it would revert the short-term trend back to a neutral stance.

Weekly Price Indicator : Consider realizing profits if you're currently short during corrections at price levels ranging from 1971 to 1920. Conversely, consider initiating a long position based on a weekly reversal signal. If you're already long, you can use the 1971 level as a Monthly Stop Close Only and Good Till Cancelled order. When the price approaches the 2111-2202 range during the month, contemplate taking profits on long positions.

Cycle : The upcoming cycle is expected on December 15, 2023. This date likely holds significance in your trading strategy.

Strategy : If you currently hold long positions, it is advisable to consider taking profits when the price reaches the 2111-2202 levels.

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