Last week, global central banks collectively 'released the wind', and the gold market staged a thrilling tug-of-war at the $4350 level.
As an analyst who closely monitors the market every day, it felt like I was watching a top tennis match last week as data and policies exchanged blows between the bulls and bears, with gold prices fluctuating repeatedly in the range of $4300 to $4375.
As soon as the non-farm data was released on Tuesday, the market exploded: the unemployment rate soared to 4.6%, a four-year high, but new jobs exceeded expectations. This contradictory signal left gold bulls both excited and cautious. The rising expectations for a Fed rate cut and the technical overbought signals created a tug-of-war, making each price surge full of suspense.
01 The three major central banks collectively 'let the wind out', decoding how policy signals affect gold prices.
The real highlight of last week was the policy showdown among the three major central banks, which completely exposed the divergences among global central banks.
There is a clear division between hawks and doves within the Federal Reserve. Governor Waller believes there is still room for rate cuts, while Atlanta Fed President Bostic openly opposes further easing. This internal divergence has made market expectations of the Federal Reserve unclear.
Although the European Central Bank has remained still, it has quietly raised its inflation forecasts. Lagarde is no longer a moderate dove but has transformed into a 'hawkish observer', signaling to the market a persistent maintenance of high interest rates.
The Bank of Japan has finally bid farewell to the era of negative interest rates, raising the rate to 0.75%. Ueda's speech seemed neutral on the surface but actually concealed secrets; the statement of 'not commenting on the exchange rate level' reflects deep concerns about the yen's weakness potentially driving up inflation.
These policy divergences have caused the U.S. dollar index to fluctuate repeatedly in the 98-99 range, creating a unique trading environment for gold.
02 The technical landscape under the long and short game is fully grasped at key points.
When I opened the 4-hour chart of gold, an intense battle between bulls and bears was unfolding on the chart.
The $4350-$4360 area has become an insurmountable gap for bulls; gold prices attempted to break through this resistance zone three times last Wednesday but all failed. Each time approaching this area, profit-taking pressure surged, creating strong selling pressure.
The support below should not be underestimated. The first line of defense is at $4320-$4324, which is an important support range on the hourly chart. The more critical second line of defense is at $4306-$4310; if breached, gold prices may test the important support area of $4260-$4285.
Technical indicators send conflicting signals: the daily moving averages are still in a bullish arrangement, but the RSI indicator has entered the overbought region. This technical divergence suggests that the risk of short-term adjustments is accumulating.
03 Christmas week trading guide, coping with low liquidity challenges.
As the Christmas holidays approach, market liquidity will gradually dry up. Historical experience shows that a low liquidity market is like a seemingly calm but hidden whirlpool; a small amount of capital can trigger violent fluctuations.
My trading strategy is very clear: do not chase highs around $4350; instead, gradually position for shorts, with stop-loss set above $4370. If gold prices pull back to around $4300 and find support, it would be an ideal entry point for short-term longs.
For traders of different styles, I offer differentiated advice:
Short-term traders: focus on the range fluctuations of $4320-$4350, buy low and sell high, but be sure to strictly control positions.
For medium to long-term investors: any pullback to the $4250-$4280 area is a good opportunity to build positions gradually. Next year's interest rate cut cycle and central bank gold buying demand will continue to support gold prices.
Position management is key to surviving Christmas week. I recommend keeping positions at a normal level of 30-50% to cope with any unexpected volatility.
04 Future outlook, is the foundation of the gold bull market still solid?
Setting aside short-term fluctuations, the long-term bullish factors for gold remain solid. Central banks around the world have been increasing their gold holdings for 13 consecutive months, with annual net purchases expected to exceed 1200 tons.
The Federal Reserve's interest rate cut cycle has just begun, and history shows that gold often performs well in rate cut cycles. A low interest rate environment significantly reduces the opportunity cost of holding gold, which fundamentally supports gold prices.
Geopolitical risks still lie in the hands of gold bulls. The situation in the Middle East, the U.S. debt issue, and the election year for major global economies could trigger safe-haven sentiments at any moment.
Standing in front of the market chart, I find that the gold market is in a brief state of balance. Both bulls and bears are temporarily at a standstill around $4350, but this feels more like the calm before the storm.
As the Christmas holidays approach, market liquidity will gradually decline, and any unexpected volatility could be amplified. For sharp traders, this is both a risk and an opportunity.
Whether you are a short-term trader or a long-term investor, the $4300 watershed is worth close attention. If it stabilizes, we can expect an attempt to push towards $4400; if it fails, it may seek support at $4260 or even lower.
Risk warning: The above content is only personal opinion and does not constitute investment advice. Markets are risky, and investments should be cautious.
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