The price of gold have been relatively volatile during the past couple of weeks due to the swings in market sentiment. On November 9, gold marked a new all-time high at $1,424.00 per ounce before falling steeply amid the speculation that China will raise its interest rates to place a check on its 4.4% inflation figure for the month of October. A rise in interest rates would likely slow China’s growth and since it is now the number two biggest economy in the world, such would not go reflect in the other countries as well especially its trading partners, hence, boosting the greenback. It’s kind of weird, however, since the price of gold actually rose when the same inflation data in China was released the day before.
In any case, the price of gold rallied back and is actually flirting with its previous all-time high again (kindly check out my last analysis). Last Friday (December 3), traded strongly when the NFP report in the US only showed that US firms only added 39,000 jobs in November against the 143,000 estimate. The employment report also showed that the country’s jobless rate data has jumped to 9.8% as well. You see, unlike the other economic data nowadays, data on employment tends to be positively correlated with the movement in the greenback. The day before, gold likewise rose not on because of negative data but on news that pending home sales soared by an unprecedented 10.4% during the previous month versus the -0.7% forecast.
As mentioned, the price of gold is once again approaching its previous all-time high. As you can see from its daily chart, its uptrend line is very well intact but given its overbought conditions as indicated by the stochastics, the price of gold could range for awhile between the its high and the uptrend line before making a move higher. A move past the said high could propel it towards $1,525.00.
On the economic front, Australia, Canada, New Zealand, and the UK will all be having their monetary policy decisions this week. None of them, though, are expected to raise their interest rates due to their soft economic conditions. Barring any hawkish outlook, a move to stay as is would be typically bearish for the anti-dollar currencies and of course bullish for the USD. Such would of course weigh on the price of commodities such as gold.