With gold coming off the back of an outsized 6% rally last week, we’ve seen consistent and unrelenting selling throughout Asia trade today. Some attribute the selling to headlines that Israel and Hezbollah are close to a truce, but unless this was known to many well before the headlines broke, I would be hesitant to feel this was the true trigger. Sure, any positive news on the geopolitical front is a small negative for the gold market. However, after the consistent buying flows seen since 14 November, today’s price action feels more like a position adjustment, with weaker hands taking gold longs off the table ahead of a US consumer confidence report which could get a larger-than-expected Trump bump, with the additional risk of a hotter US core PCE print, which would go someway to taking a December Fed rate cut off the table.
A daily close below Friday’s low of $2668.20 is worth monitoring, as this could signal a change in the short-term trend higher and a sign that the buyers have lost control in their quest to push prices back to $2800. With a shortened trading week for many in the US, getting the orders and managing exposures early seems the likely and most prudent thing to do, and one can assume there is an element of the gold market going into this week with some healthy short-term profits that can be banked ahead of this important data flow.
