Gold Prices Falter Amid Positive NFP Data: A Shift in Market Sentiment?

Gold prices pared some of its gains after upbeat US NFP data. It hit a low of $2613 and is currently trading around $2626.

ETFs Facing Outflows

In November 2024, gold exchange-traded funds (ETFs) experienced significant outflows of 28.6 metric tons, or about $2.1 billion. This marks the first monthly outflow after six months of inflows, largely due to profit-taking following Donald Trump's election victory, which coincided with a 5% drop in gold prices. Year-to-date demand for gold ETFs has turned negative, hinting at a potential fourth consecutive year of overall outflows, particularly pronounced in Europe.

Strong U.S. Job Market Data

In November 2024, the U.S. added 227,000 jobs, much more than the expected 202,000, showing a strong job market after a weak October. The unemployment rate stayed steady at 4.2%, but there was a drop of 355,000 full-time jobs. Private sector jobs rose by 194,000, with strong growth in leisure and hospitality. Wages increased by 0.4% compared to last month, indicating stable earnings.

Technical Analysis of Gold Prices

From a technical standpoint, gold prices are currently above both short-term and long-term moving averages, indicating a bearish trend. Immediate support is at $2,600, with potential declines to $2,570, $2,536, and $2,500. Resistance is set at $2,670; if broken, prices could rise toward $2,700, $2,720, and $2,750. A suggested trading strategy is to buy on dips between $2,600, maintain a stop-loss at $2,570, and aim for a target price of $2,665.