Gold and Silver See Volatile Rebound
In the early hours of Thursday, December 5th, the Asian market witnessed a narrow oscillation in spot gold prices, which hovered around $2648 per ounce. The previous day marked a slight increase in gold prices, closing at approximately $2649.74 per ounce. This change came amidst new data indicating a modest rise in U.S. private sector employment for the previous month, coupled with investors reacting to remarks made by Federal Reserve Chairman Jerome Powell as they awaited the non-farm payroll report scheduled for release on Friday.
The ADP report highlighted an increase of 146,000 jobs in the private sector. This figure fell just shy of economists’ expectations, who had predicted a rise of 150,000 jobs. Furthermore, activity in the U.S. services sector, which had surged in recent months, saw a deceleration in November. However, the activity levels remained robust enough to suggest a resilient economic growth for the fourth quarter of the year.
According to the ISM report, the Non-Manufacturing Purchasing Managers Index (PMI) in the U.S. dropped to 52.1 in November, down from a significant peak of 56.0 in October, which was the highest recorded since August 2022. Economists had projected it would settle at around 55.5 for November. The Federal Reserve’s Beige Book indicated a slight expansion in economic activities across most regions of the U.S. since the beginning of October, although job growth was characterized as “sluggish,” and inflation showed only a minor uptick, with businesses presenting an optimistic outlook for the future.
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Jerome Powell conveyed to the public that the current state of the economy was stronger than initially anticipated at the time of the Fed's rate cuts in September. He also signaled support for a potential easing in the pace of rate cuts. “The American economy is in very good shape, and there’s no reason not to keep it that way... The risks to the labor market appear to be diminishing, and economic growth is definitely stronger than we thought, with inflation slightly higher,” Powell said at an event hosted by The New York Times. He emphasized, “So the good news is that we can be more cautious as we seek to find a neutral level.”
Progressing into the market analysis for spot gold, the price was positioned at approximately $2643 at the opening. Within the Asian trading session, fluctuations continued until the European market reset the day’s low at a robust support level near $2632. Following that dip, gold prices began to rebound, later reaching a new intraday high of around $2657 as trades concluded on a slight upward trend, recording a minor positive close.
From a technical standpoint on the daily chart, the Bollinger Bands exhibited a flattened trajectory while the candlesticks were operating just above the middle band. Both the 5-day and 10-day moving averages were also observed near the mid-band, indicating stabilization. The MACD indicator showcased a gradual reduction in energy bars, while the KDJ indicator formed a bullish cross. The broader time frame indicated a trend of recovering from lows, suggesting a strategy of buying on dips as today’s support levels suggest a gradual upward movement.
Moreover, the short-term outlook showed a slight opening of the Bollinger Bands, signifying a trend towards upward potential. The candlesticks exhibited a rebound from previous lows, with both the 5-day and 10-day moving averages currently diverging positively upward. The MACD energy bars indicated increasing strength, whereas the KDJ displayed a bearish cross, suggesting that despite the fluctuations, traders should focus on buying low and capitalizing on upward moves throughout the day.
More specific operational suggestions were provided considering the market conditions. Traders were advised to engage in buy positions in the lower region around $2640-$2642, setting a stop-loss at $6.5, with targets at $2656, $2672, and $2690. In circumstances where prices test the lower range between $2626-$2628, creating buying opportunities with similar stop-loss parameters, traders were encouraged to look for upward targets at $2638 and $2654. Conversely, for potential sell positions, a region around $2690-$2692 was identified for short trades, maintaining a stop-loss at $6.5 while aiming for targets near $2680 and $2665.
Turning to silver, the market opened at approximately $30.98, and similarly experienced oscillations within a confined range during the Asian trading hours. As the European market commenced, silver prices tested daily low support of $30.46 before trending upward. The American session brought a significant surge, culminating in a high of about $31.47 before retracting, ultimately closing with a long lower shadow indicating bullish sentiment.
Analyzing silver on the daily chart, the Bollinger Bands were tightening, yet the candlesticks remained near the upper band indicating potential volatility. The simple moving averages at the 5-day and 10-day marks displayed a slight upward turn from the mid-band, and the MACD energy bars portrayed increasing momentum. The KDJ indicator also proceeded to cross bullishly, indicating a likelihood for a price surge. With today’s expected movement forecasted towards upward trends, traders were advised to keep buying on dips.
For operational specifics in silver, the guidance suggested initiating buy positions around $30.82-$31 with a safeguard stop-loss of $30.63 and aiming for higher targets of $31.56, $32, and $32.48. Moreover, when prices approach $30.34-$30.47, similar buy strategies were encouraged, with a tight stop-loss at $30.12, targeting $31 and $31.66. On the flip side, for potential sell opportunities, areas around $32.45-$32.57 were earmarked for short positions with stop-losses set at $32.78 while targeting lower prices at $32 and $31.53.
Lastly, in the oil market, where dynamics also played out, the previous day's market began at approximately $69.7. Similar to the other markets, oil exhibited stability within a narrow range before breaking through to highs of $70.2 during the European trading hours, which eventually led to a decline as the American session saw a fresh low establishment at around $68.3, coinciding with a significant support point, closing the day with a strong bearish movement.
The daily oil chart showed Bollinger Bands tightening while prices challenged resistance near the upper band before retreating. The moving averages at both the 5-day and 10-day indicated signs of flattening close to the mid-band, and the MACD energy bars indicated a reduction in momentum. In light of these indicators, it was clear that the pressure overhead remained immense, suggesting that any rebounds should be harnessed for short positions.
For traders in the oil sector, the recommendation involved selling at around $69.0-$69.2, setting a stop-loss at $70 and targeting lower support levels of $68, $66.5, and $65.2. Additionally, any testing around $70.5-$70.7 should prompt short entries with a stop-loss setup at $71.5 and targets led down to approximately $69.2-$67. Should prices dip to $65-$65.2, buy positions were advised with corresponding stop-losses at $64 and upward targets set for $66.6 and $68.