GOLD PRICES WEEK IN REVIEW
It was a terrible week for gold prices, and there are few good reasons to think that the worst is over. Gold in USD-terms (XAU/USD) was the best performing gold pair, which still fell by -4.49%. Elsewhere, losses were more significant and consistent across the board: five of the remaining six major gold pairs lost at least -5% over the past week. With the Australian and New Zealand Dollars the top performers in FX markets, the -5.60% and -5.84% losses experiencing by gold in AUD-terms (XAU/AUD) and gold in NZD-terms (XAU/NZD), respectively, are of little surprise.

GOLD HAS EXPERIENCED A SEISMIC SHIFT IN FUNDAMENTALS
Technical damage wrought in recent days has been significant, spurred by a sea change in the fundamental narrative undergirding gold prices during the coronavirus pandemic. Amid news that that several coronavirus vaccines are quickly advancing towards mass distribution, risk appetite has surged, lifting equity markets to fresh all-time highs.

What’s the exact opposite case of a ‘goldilocks’ scenario? Because nothing is ‘just right’ for gold prices at present time. The US economy is regaining its long-term economic potential thanks to COVID-19 vaccine developments, but no ‘blue wave’ means no significant fiscal stimulus nor changes to the tax code.

We’re looking at higher inflation, but not due to higher fiscal deficits. Even as the Federal Reserve signals its desire to keep interest rates low through 2023, US real yields are no longer falling, back to the same place they were in mid-October. With US corporate profits growing at record rates, safe havens have fallen out of favor for growth-sensitive assets; gold fits the bill as a prime candidate to have been suffering in recent weeks.

TOP FX EVENTS IN WEEK AHEAD
The first week of December offers a heavy economic calendar, with multiple ‘high’ rated events on the DailyFX Economic Calendar from various corners of the globe.

- On Monday, November Chinese NBS Manufacturing PMI and November German inflation data will be released.

- On Tuesday, the final Reserve Bank of Australia rate decision of 2020 will adjourn. Later in the day, November German labor market data, Q3’20 Italian GDP, and November Euroarea inflation will be released. Finally, Q3’20 Canadian GDP and both November US ISM and Markit Manufacturing PMIs will be released.

- On Wednesday, the Q3’20 Australian GDP report will be released.

- On Friday, the October Canadian trade balance report will be released, as well as both the November Canadian labor market report and November US nonfarm payrolls report.

GOLD PRICE(XAU/USD) RATE TECHNICAL ANALYSIS: DAILY CHART (NOVEMBER 2019 TO NOVEMBER 2020) 

After the US Thanksgiving holiday, gold prices have held below significant technical support levels established in recent months. The conclusion that gold prices are in the process of carving out a near-term top remains valid.

Despite the stabilization seen at the end of the week, gold prices have barely rebounded from their lowest level since mid-July, having previously broken through the August swing low near 1818.09. By breaching the cluster of Fibonacci retracements above 1800 and plunging thereafter, gold price action suggests that the recent weakness is not just transient. Gold price momentum remains bearish, with gold prices below their daily 5-, 8-, 13-, and 21-EMA envelope, which is still in bearish sequential order. Daily MACD continues to trend lower below its signal line, while Slow Stochastics are still sitting in oversold territory.

Reference by: Christopher Vecchio, CFA, Senior Currency Strategist