Gold Falls Sharply After Hitting an All-Time High
On Monday, the gold (XAU) price initially surged above 2,100 and set a new all-time high but then declined sharply by 2%, eventually closing near 2,030.
Yesterday's move in XAU/USD was rather unusual. The influx of fresh long positions in the early Asian trading session took out Stop-Loss orders near 2,080, exacerbating the upward move. Fundamentally, the general picture hasn't changed much. Traders believe the Federal Reserve (Fed) will deliver the first rate cut in March 2024. Even after the dramatic moves of gold, 'the overall trend for gold still looks bullish,' said Ilya Spivak, the head of global macro at Tastylive. However, some traders believe that the market is getting tired of the dovish Fed narrative and needs new catalysts to support the bullish trend in gold. One such catalyst can come from macroeconomic data, for example, if the nonfarm payroll figures come out lower than expected.
XAU/USD was relatively flat during the Asian and early European trading sessions. Today, investors should focus on the release of the U.S. Job Openings report at 3:00 p.m. UTC. Lower-than-expected figures may push XAU/USD above 2,050. However, if the figures come out higher than the forecast, the short-term bearish trend in XAU/USD may continue. 'Spot gold may test support of $2,009 per ounce, a break below which could open the way towards $1,980,' said Reuters analyst Wang Tao.
AUD Continued Declining After the Dovish RBA Statement
The Australian dollar (AUD) lost 0.79% on Monday as traders repositioned ahead of the Reserve Bank of Australia (RBA) interest rate decision, and the US dollar recovered from a multi-month low.
As expected, the RBA left its base interest rate unchanged at 4.35% and said that economic data has aligned with the central bank's projections, suggesting that additional rate hikes may be unwarranted. The market considered the RBA statement to be dovish. 'The statement, in our view, was less hawkish than November's and also less hawkish than we expected. We continue to think the hiking cycle is over, though we do note the bank's data-dependent approach means the possibility of another hike after the Q4 inflation print,' Barclays analysts wrote in a note.
AUD/USD continued to fall during the Asian and early European trading sessions. The market will soon get a chance to assess whether the recent dovish statement by RBA was in line with reality. On Wednesday, the Australian Bureau of Statistics will release the latest Gross Domestic Product (GDP) report at 00:30 a.m. UTC. Investors expect to see a seasonally adjusted quarterly growth of 0.4%. Lower-than-expected figures will likely extend the bearish trend in AUD/USD, potentially bringing the pair below 0.65500. However, better-than-expected data may reverse the short-term bearish in AUD/USD, with the pair consolidating above 0.66000.