Gold, represented by XAU/USD, experienced a pullback from the $2,080 level on Tuesday, retreating to around $2,050 amid a decline in risk appetite triggered by weaker-than-expected US economic data.
The US S&P Global Manufacturing Purchasing Managers’ Index (PMI) for December fell short of investor expectations, reaching a four-month low of 47.9, compared to the anticipated steady figure of 48.2 from November.
Investor sentiment shifted in response to the disappointing data, leading to a reconsideration of expectations for rate cuts from the US Federal Reserve (Fed). Market consensus, which initially priced in around 150 basis points in rate cuts by the end of the year, is now showing signs of moderation. This contrasts sharply with the Fed’s own rate expectations, as indicated by the dot plot, foreseeing a maximum of 75 basis points in rate cuts through 2024.
The upcoming release of the first US Nonfarm Payroll (NFP) report for 2024 on Friday is expected to further impact market sentiment. Forecasts suggest a slight easing in December’s job additions from 199,000 to 168,000.
Before the NFP report, investors will navigate midweek data releases, including ISM Manufacturing and the Fed’s Meeting Minutes on Wednesday, followed by Thursday’s ADP Employment Change and Initial Jobless Claims for the week ending December 29.
Technical Analysis of XAU/USD
In intraday trading, Spot Gold (XAU/USD) dipped towards the 200-hour Simple Moving Average (SMA) around $2,060, with near-term support limited by the 50-hour SMA below $2,070.
On the daily candlesticks, XAU/USD maintains an upward trend but faces resistance as Gold struggles to return to the early December rally, reaching all-time highs near $2,140.
Despite the retracement, gold prices remain well-supported above the 200-day SMA near $1,960, with a near-term price floor positioned just above the $2,000 major price level.
