- Stronger dollar has pushed XAUUSD to support at uptrend from July
- With XAUUSD at lower end of current range, some buyers have emerged
- Stronger USD has mostly translated into a higher XAUEUR
- Real-money dollar buyers have only begun to react to weakness in EURUSD
- Gold's path depends largely on Friday's US jobs data, seen key to Fed policy
A resurgent dollar has pushed XAUUSD to lower end of its current range. Photo: iStock
By Ole Hansen
Once XAUUSD reached the lower end of its current range, we are seeing a few buyers returning today despite the dollar retesting recent highs. The news from the currency market is that real money dollar buyers have only just started to react to the recent weakness in EURUSD. Whether this will translate into even more gold weakness depends largely on Friday's US job report.
EURUSD trading at a three-month low. Bearish bets on IMM euro came to 106,000 lots (€13.25 billion) last week, less than half the amount seen in March.
All the October gains in XAUUSD were wiped out after the FOMC wrong-footed the market last week, but today we have seen some sporadic support emerge. The above-mentioned stronger dollar has so far mostly translated into a higher XAUEUR, with XAUUSD finding some support at the uptrend from July.
Stronger dollar has pushed XAUUSD to support level
Sentiment has been hurt by the prospect of a December US rate hike and long liquidation from hedge funds who sharply increased bullish bets during a five-week period up until last Tuesday.
With only six weeks until the final FOMC meeting of the year, the market will keenly focus on incoming US data to decipher what the Fed intends to do on December 16. Attention turns especially to Friday's US jobs report, and, having been wrong-footed in October, market movements could now slow down as traders look for further guidance.
Hot Springs, Arkansas. Whether gold is well-bid or sold off depends largely on whether
the US economy creates jobs briskly or sluggishly. Photo: iStock
— Edited by John Acher
Ole Hansen is head of commodities strategy at Saxo Bank