By Ernest Hoffman, Kitco News
(Kitco News) – The precious metals investment community is skittish once again after the largest one-week gain for gold in over a year last week was followed by the largest one-day decline for the yellow metal in four years on Monday.
Spot gold kicked off the week trading at $2,713.65 per ounce and rose quickly to resistance at $2,720 early Sunday evening. But this proved to be the high point for the precious metal this week, as spot gold prices quickly declined to $2,670 per ounce by 11:00 p.m., followed by a near-term low of $2,664.79 just before 1:00 a.m. EST.
The Asian and European sessions then managed a moderate recovery, with spot gold rallying to $2,687 per ounce by 6:45 a.m. EST Monday morning. But North American traders then joined the fray, driving the yellow metal sharply down from $2,681 at 8:30 a.m. to $2,634 per ounce by the North American equity open.
Gold prices continued to trend lower throughout the day, setting what ultimately $2,609 per ounce by 6:30 p.m. EST. And while the yellow metal quickly recovered above $2,625 shortly thereafter, it would be days before prices saw significant upside as Tuesday, Wednesday, and the American Thanksgiving holiday on Thursday all proved relatively uneventful, with the yellow metal trading between $2,620 and $2,656 per ounce, often returning to the $2,640 level.
Thursday evening finally brought a significant upside move for prices, with spot gold rallying from $2,636 per ounce at 7:45 p.m. EST to $2,661 by 9:15 p.m. from a combination of U.S. dollar weakness and renewed safe-haven buying on escalating rhetoric surrounding the Russia-Ukraine conflict.
From there, gold established a new higher range, unable to break above $2,666 per ounce on the one hand, but holding comfortably above $2,650 per ounce on the downside, and those levels held into Friday’s close.
The latest Kitco News Weekly Gold Survey showed the predictions of industry experts divided near-evenly between bullishness and consolidation, while retail traders also pulled back from the previous week’s bullish sentiment.
Marc Chandler, managing director at Bannockburn Global Forex, sees both upside and downside pressures on gold prices in the near term.
“Gold snapped a five-day nearly 6% rally to start last week with the nomination of hedge fund manager Bessent as US Treasury Secretary,” he said. “Gold dropped nearly 3.4% on Monday – the largest fall in five months. Although US interest rates and the dollar pulled back, gold traders have been spooked.”
“The yellow metal has not retraced even half of its losses (~$2663.40),” Chandler noted. “A solid jobs report at the end of next week (~200k) could dampen speculation of a Fed cut in December and support the USD and rates. Still, the US threatening to defect from the international order it was so instrumental in creating provides a powerful incentive for (some) foreign central banks to continue accumulating gold reserves.”
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “February gold remains in a short-term uptrend on its daily chart, despite the sharp selloff seen to open this US holiday-shortened week.”
He said that the Thanksgiving holiday on Thursday and lower trade volumes on Friday open the door “to potential Chaos overseas.”
“This could keep buyers interested early next week or lead to another one-day selloff similar to what was seen this past Monday,” Newsom added. “The bottom line is Feb gold should move higher eventually.”
“Up,” said James Stanley, senior market strategist at Forex.com. “While the early-week sell-off was intense as some of the geo-pol bid seemed to leave, the response from bulls at support 2617-2621 was notable. That highlights buyers responding to pullbacks and a perceived value after one of the big short-term drivers was priced out. So I’m sticking with bullish.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, said he isn’t reading anything into gold’s performance this week because of the holiday.
“I don't read anything into any performance from this week, ever,” he said. “Gold has been quite volatile, cryptos had been quite volatile, and certainly, we've seen gold swing in both directions. Because a lot of people are away and volumes are light, it's hard to read much into it.”
In terms of the medium-term trend, Cieszynski sees support holding up well, but doesn’t expect a strong break to the upside anytime soon.
“It's interesting,” he said. “We had some good support coming in about $2,600 recently, and gold's climbing up off of that. And then I see the first resistance around $2,690 to $2,720. Those are the two recent [smaller] highs, one in September and one in November.”
“It's looking like a head and shoulders top might be forming in gold, so that’s something we’ve got to keep an eye on here,” he added. “Are we seeing a top forming, or are we just in a consolidation and this uptrend continues? So far, it does look like the uptrend is continuing.”
Cieszynski said that both the technical and the fundamental pictures are uncertain right now, and caution is advised.
“Gold had a big run from February through to end of October, and I think we're just in a consolidation phase,” he said. “Technically, gold needed to consolidate its gains, it's had a huge move, and fundamentally, there's a lot of moving pieces. I think we're probably settling into a trading range of, say, $2,532 and just under $2,800 and bouncing around between there.”
“As we watch moving averages and trends, we might start to get a better idea of which way gold could move out of that range eventually,” he added, “but it could also swing back and forth in this range for a while.”
Looking ahead to next week’s nonfarm payrolls report, Cieszynski said the data is going to be put through the Fed filter.
“If you get a good employment number, it would probably suggest the Fed is more likely to not cut rates, and then that would boost the U.S. dollar and could have a knock-on for gold. But there's so many different moving pieces going around; the economic is only a part of it right now.”
“Looking at all these technicals, I’m just going to go neutral for next week,” he concluded. “Gold looks like it's had a big run; it's had a couple of corrections, and now it's probably going to start to consolidate for a while.”
This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street sentiment remaining divided between optimistic and wait-and-see attitudes. Six experts, or 43%, expected to see gold prices rise during the week ahead, while seven analysts, or 50%, predicted further consolidation for gold. Only one expert, representing 7% of the total, expected a price decline for the precious metal.
Meanwhile, 199 votes were cast in Kitco’s online poll, with Main Street sentiment also cooling after the week’s price performance. 96 retail traders, or 48%, looked for gold prices to rise next week, while another 61, or 31%, expected the yellow metal to trade lower. The remaining 42 investors, representing 21% of the total, expected gold to trend sideways in the near term.
Employment data will dominate next week’s economic news calendar, with the release of JOLTS job openings on Tuesday, ADP employment on Wednesday, weekly jobless claims on Thursday, and the nonfarm payrolls report on Friday.
Markets will also be paying attention to the ISM manufacturing and services PMIs, released on Monday and Wednesday, respectively, along with University of Michigan preliminary consumer sentiment on Friday.
Wednesday will also provide one of the last opportunities to hear from Federal Reserve Chair Jerome Powell before the blackout period when he participates in a moderated discussion at the New York Times DealBook Summit.
Mark Leibovit, publisher of the VR Metals/Resource Letter, said he’s out on gold for the time being.
“Rally ended last Friday, and I was wrong about further upside follow-through,” he said. “Currently looking to re-enter the long side when I see another technical buy signal.”
“I am flat, no positions at this time,” Leibovit added.
Adam Button, head of currency strategy at Forexlive.com, was working to decipher the signals coming out of the Trump camp and what they could mean for the USD and gold prices.
“Trump wants four things,” he said. “GDP growth at three percent, the deficit down to something like 3 percent from 7 percent, the trade deficit significantly lower, and a higher stock market. Those are Trump's four priorities, economically. You can't accomplish those with tariffs.”
“You know what you can accomplish those four things with? A weaker dollar,” Button said. “And that's something that Scott Bessent has advocated for and talked about. And the threat of tariffs, especially with China, may be the path to a revaluation in the currency market, particularly of the Yuan, perhaps the yen as well, because they'd certainly appreciate.”
“I think that's an idea that's going to percolate,” he added. “I think there's something there that people in the gold market should be appreciating. I think it should be on everyone's radar that for Trump to accomplish his goals, perhaps the only way Trump can accomplish his goals, is with a meaningful decline in the U. S. dollar, which would be undoubtedly bullish for gold.”
In the near term, Button said he’s trusting gold’s seasonal trend.
“The December-January seasonal strength in gold is as good as it gets in any market,” he said. “The track record of gold’s gains during that period is extraordinary. That doesn't mean it will happen every year, but it's a good bet. It's also a very good month for risk trades, and I think it probably plays into dollar weakness, gold strength.”
“It's something of a ‘buy-everything’ market this week,” he added. “Some people think that's month-end flows, but I don't think it is.”
As for nonfarm payrolls, Button said he’s discounting the employment report’s impact on Fed policy this month.
“The Fed is going to have a difficult time with November payrolls, because you have a give-back from the hurricanes and you have election hiring and spending,” he said. “I would be reluctant to take anything away from nonfarm payrolls, even with a big surprise, and I think that's how the Fed will see it as well.”
Analysts at CPM Group are calling gold a buy at current levels, with an initial target price of $2,700 by Dec. 11.
“Gold prices fell sharply earlier this week in response to a de-escalation of tensions in the Middle East and the market viewing Trump’s nominee for Treasury secretary – Scott Bessent – as someone who would have a softer approach toward tariffs,” they wrote. “There were and are concerns that tariffs, if increased sharply, have the potential to drive inflation higher and reduce economic activity, perhaps precipitating recessions in major trading nations. These concerns were calmed to some degree with the appointment of Scott Bessent.”
“While these factors weighed on gold prices, the medium to long term economic and political issues have not gone away, which continues to make gold an attractive purchase on pullbacks,” they said.
“I am neutral here,” said Michael Moor, Founder of Moor Analytics. “However, decent penetration below 25634 (+1 tic per/hour starting at 11:20 am) will project this downward $166.00 (+). If we break below here decently and back above decently, look for decent strength to come in for days. In a Higher timeframe, we are still in an overall bull trend from November 2015, and likely in the later stages. Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4 – of which we have attained $653.4 so far. These are ON HOLD.”
“In a Medium time frame, the trade below 27730 brought in $231.5 of the pressure warned about, the trade below 27539 brought in $212.4 of pressure, the trade below 27141 projected this downward $95 (+) and we attained $171.9,” he added. “These were put ON HOLD on 11/18. In a Lower time frame, on 11/18 we left the minor bullish reversal below warned about — we have seen $122.3 from the 26009 open before rolling over.”
And Kitco Senior Analyst Jim Wyckoff thinks gold will hold Friday’s gains and move higher next week. “Steady up as bulls have gained momentum on safe-haven bidding,” he said.
At the time of writing, spot gold last traded at $2,650.35 per ounce for a gain of 0.48% on the day but a loss of 2.24% on the week.
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