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• 2024-07-04

Gold & Silver: Volatile Ahead of Non-Farm Payrolls

As we enter the first week of December, the global market is once again setting its eyes on the shiny allure of gold. Trading around $2,623 an ounce, gold prices have experienced a slight decline of 0.68% in the previous session, creeping close to the support levels established last week at about $2,620.83. This decrease occurred shortly after the data concerning initial jobless claims in the United States was released, which suggested a cooling off in the jobs market. Consequently, market expectations concerning an imminent rate cut by the Federal Reserve for the December meeting have also cooled a bit. Yet, the drop in gold prices has been somewhat restrained due to ongoing geopolitical tensions and a collective anticipation surrounding the upcoming non-farm payrolls data that may illuminate the Fed’s potential rate-slicing stance.

Amidst these fluctuations, the recent report from the Department of Labor showed a moderate uptick in the number of people filing for unemployment benefits, indicative of a labor market undergoing a steady slowdown. For the week ending November 30, 9,000 new claims were made, adjusting seasonally to about 224,000. Initially, economists had anticipated this number might hover around 215,000. Another report from the Bureau of Economic Analysis noted that trade deficits shrank by 11.9% in October to $73.8 billion, with imports experiencing their largest drop since the end of 2022, which potentially hints at a positive contribution to economic growth in this quarter.

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All eyes in the market are now shifting towards data that more directly indicates employment conditions. This Friday, non-farm payrolls data are expected to be released, which will provide deeper insights just ahead of the Federal Reserve’s December 17-18 meeting where inflation indices will also be discussed. Predictions estimate an increase of around 200,000 jobs in November, in contrast to a mere 12,000 increase the previous month—the weakest since December 2020. The unemployment rate is projected to inch up from 4.1% in October to 4.2%.

In analyzing the current state of the precious metals market, it's important to note that gold opened yesterday at approximately $2,650. After a slight upward movement in the Asian session, it met with resistance near $2,655 before beginning to fall. The European market reflected a slight downward trend, leading to further declines after the American market opened, ultimately closing at a new daily low of around $2,623. In today’s technical analysis, the Bollinger Bands are narrowing, indicating a consolidation phase, with prices oscillating around the mid-band as both short-term moving averages (MA5 and MA10) pivot downwards. The MACD histogram is gradually shrinking, while the KDJ indicator reflects a bullish crossover.

Short-term outlook indicates the potential for a rebound following today's non-farm payroll high data release, with significant support levels expected to drive a rally in prices. Observing the short cycle, further declines are anticipated before a rise, suggesting a tactical approach of short positions initially before re-entering with local buy orders.

Turning our attention to silver; prices hovered around $31.22 yesterday, reflecting slight gains during the Asian session before encountering turbulence in the European markets. As the American markets came alive, silver also faced a downturn while closing modestly higher, showcasing a small bullish candle on the daily chart. Presently, the Bollinger Bands seem stable, with upward potential on the horizon as the moving averages on both MA5 and MA10 begin to turn upwards from the mid-band. However, the KDJ indicator remains bearish.

For silver trading strategies this December, recommended actions include taking long positions near $30.72 to $30.84 with a stop placed at $30.52, targeting a ceiling at $31.56 through $32.48. Additionally, traders may consider dipping into positions around $30 to $30.27, with a stop set at $29.83 and parallel targets. For higher price points, short strategies around $32.45 to $32.57 with provisions for potential profit should also be established.

In global oil markets, crude prices opened at around $68.5, maintaining stability within a narrow trading range throughout both the Asian and European sessions. However, American trading saw a spike to around $68.9 moments before the market corrected itself, closing lower with continued bearish indicators. Prices remain under significant pressure, as the analysis of moving averages suggests the market is trending downward with substantial resistance at current levels.

In conclusion, trading in precious metals and commodities will have varying dynamics in December with important economic indicators being released. Gold is primed for a potential rebound, whereas silver shows limited upside amidst its fading momentum, while crude oil is expected to follow a downward trajectory. The interplay between fundamental data, market sentiment, and geopolitical developments will be paramount as traders maneuver through this economically pivotal month.