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As shown in the XAU/USD chart, last Thursday, the price of gold dropped below $2,540. Today, however, the precious metal has surged above $2,660 per ounce.

The more than 5% weekly increase was driven by a new wave of international tensions, particularly the escalation surrounding the approval for Ukraine to use Western long-range weapons for strikes deep into Russian territory.

Technical analysis of the XAU/USD chart highlights that last week’s upward reversal once again demonstrates how effectively parallel channel lines can work. During the summer, the median line of the ascending channel (marked in blue) acted as support. However, following its bearish breakout on 11 November, the lower boundary of the channel, reinforced by the $2,535 level (which served as resistance in August and September), provided support for the price.

Will Gold Prices Continue to Rise?

Much will depend on the fundamental backdrop:

→ Geopolitical news;

→ The release of economic indicators. For instance, at 16:30 GMT+3 today, the US jobless claims report will be published, while tomorrow will bring PMI data for various countries.

Further growth in gold prices cannot be ruled out, especially given the long-term upward trend. However, it is worth noting that bulls have approached a significant resistance level near $2,677. This area saw bearish dominance on 11 November, leading to a breakout of the median line. Bears may attempt to defend control of this level.

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• USDJPY trims gains, falls below steep bullish channel
• New sellers could show up below 153.00-153.55

USDJPY came under pressure early on Thursday, trimming Wednesday’s moderate gains and putting its two-month-old bullish channel at risk once again.

The technical signals are not providing clear direction, with the falling RSI maintaining a sideways trajectory above its 50 neutral mark and the stochastic oscillator pointing down despite posting a positive cross.

Perhaps a downside correction may not scare traders and could still be an opportunity to buy the dip unless the price slumps below the 153.00-153.55 area, breaking below the 20-day exponential moving average (EMA) and beneath a shorter-term bullish channel. If that proves to be the case, selling forces could intensify toward the 50-day EMA and the 50% Fibonacci mark of 150.75. Note that the 200-day EMA is also nearby at 150.25. Hence, if it gives way too, there is potential for a sharp decline to 148.11.

In the bullish scenario where the price advances above 155.40, it could head straight up to the resistance area of 157.00-157.70. Should the former barrier of 158.35 prove fragile as well, the rally could speed up to 159.35 taken from April-May 1990 and then push toward the channel’s upper band seen near 160.50.

Overall, the uptrend in USDJPY seems to have geared down, shifting to a lower bullish channel. While downside risks have not evaporated, only a decline below 153.00-153.55 could activate fresh selling orders.

The NZD/USD pair is trading near 0.5879, experiencing volatility as the market awaits the upcoming Reserve Bank of New Zealand (RBNZ) meeting. Expectations are leaning towards a significant rate cut, with a 50-basis-point reduction considered the baseline scenario and a 25% probability of a more aggressive 75-basis-point cut.

Adding to the uncertainty are pessimistic projections from the New Zealand Treasury, suggesting potential delays in economic recovery, further weighing on sentiment around the NZD.

Internally, the US dollar’s strength, fuelled by mixed expectations regarding the Federal Reserve’s policy decisions in December, continues to exert substantial pressure on the NZD. Since the US election, the dollar has emerged as a dominant force, benefiting from robust domestic factors, and overshadowing other currencies that lack similar support, leading to their devaluation. As a result, the NZD, particularly vulnerable, reflects this broader depreciation trend against the USD.

Technical analysis of NZD/USD

On the H4 chart of NZD/USD, the market corrected to the 0.5921 level. Today, a decline wave structure is forming at the 0.5858 level, marking the boundaries of the consolidation range. A downward exit from this range could indicate the potential for the wave to extend towards 0.5777. Alternatively, an upward exit may result in another corrective move towards 0.5944 before the price resumes its decline to 0.5777.  From a technical standpoint, this bearish outlook for NZD/USD is supported by the MACD indicator, with its signal line below zero and sloping downward.

On the H1 chart of NZD/USD, the market has formed a consolidation range around 0.5875. Today, another decline wave towards 0.5777 is likely to develop. At this level, the wave is expected to exhaust its downside potential. This scenario is technically confirmed by the Stochastic oscillator, with its signal line below 50 and trending downward.

Short Term Elliott Wave View in Gold (XAUUSD) suggests that rally to 2790.07 ended wave ((3)). Pullback in wave ((4)) unfolded as a double three Elliott Wave structure. Down from wave ((3)), wave A ended at 2724.6 and rally in wave B ended at 2749.9. Wave C lower ended at 2643.1 which completed wave (W) in higher degree. Rally in wave (X) ended at 2710.61. The metal then turned lower in wave (Y) with subdivision as another zigzag. Down from wave (X), wave A ended at 2589.5 and wave B rally ended at 2618.8. Wave C lower ended at 2537.7 which completed wave (Y) of ((4)) in higher degree.

The metal has turned higher in wave ((5)). Up from wave ((4)), wave ((i)) ended at 2577.47 and wave ((ii)) pullback ended at 2554.34. The metal extended higher in wave ((iii)) towards 2641.92 and pullback in wave ((iv)) ended at 2618.7. Expect wave ((v)) of 1 to end soon and the metal to turn lower in wave 2 to correct cycle from 11.14.2024 low in 3, 7, or 11 swing before it resumes higher. Near term, as far as pivot at 2537.7 low stays intact, expect dips to find buyers in 3, 7, or 11 swing for further upside.

XAUUSD 60 Minutes Elliott Wave Chart

XAUUSD Elliott Wave Video

https://www.youtube.com/watch?v=_QAsmmy9M60

French ECB Governing Council member François Villeroy de Galhau, speaking at a conference today, emphasized a cautious and pragmatic stance on monetary policy, downplaying the significance of recent stronger-than-expected wage data.

He described the Q3 surge in negotiated wages as a “backward-looking” indicator, primarily reflecting the “lagged effects” of earlier negotiations in Germany, which were already factored into the ECB’s September projections.

Villeroy highlighted a shift in risks, stating that the balance for both growth and inflation now tilts to the downside. He also noted that potential US tariffs are "not expected to alter significantly the inflation outlook in Europe".

Against this backdrop, Villeroy reaffirmed the ECB's commitment to "continue to reduce the degree of monetary policy restriction," while underscoring that the pace must be guided by "agile pragmatism" and "full optionality" in future decisions.

At a forum today, BoJ Governor Kazuo Ueda admitted that the central bank takes exchange rate movements "seriously" when forming its economic and inflation outlook. He also stressed the importance of understanding the factors driving current exchange rate changes and their broader implications.

On monetary policy, Ueda reiterated that decisions would be made "meeting by meeting," based on the most up-to-date information. With a month remaining until December meeting, Ueda noted that additional data would provide greater clarity for the central bank’s deliberations.

Commenting on potential impacts from the policies of US President-elect Donald Trump, Ueda admitted that it was too hard to predict. He affirmed that "as soon as the new administration announces new set of policies, we would like to incorporate into our economic outlook."

Markets

Geopolitical developments keep hijacking headlines. Risk sentiment improved at the start of yesterday’s trading session on talk that Russian president Putin would be open to talks on a ceasefire deal in Ukraine with the US. The optimism quickly evaporated after the Biden administration decided to give Ukraine antipersonnel mines and after Ukraine deployed first long-term missiles from the UK (Storm Shadow) days after first such arms from the US (ATACMS). Key European equity benchmarks closed up to 0.50% lower. US stocks treaded water going into Nvidia earnings which brought a tepid reaction. While still beating consensus, they didn’t top highest estimates triggering some pullback in the share in after-trading after the recent run-up. Eco data included higher-than-expected October UK CPI figures and record high EMU wage growth (Q3: +5.4% Y/Y) which failed to really leave a (negative) mark on bond trading. Daily changes on the German curve were limited to +- 1bp. UK yields were unchanged apart from an underperformance of the (very) long end of the curve: 10y +2.7bps, 30y +5.2 bps). The US yield curve bear flattened with increases between +1.6 bps (30-yr) and +3.4 bps (2-yr) following some hawkish Fed comments. EUR/USD oscillates between 1.05 and 1.06. US money markets now put the probability of a 25 bps Fed rate cut in December at only 50%. The latest repositioning started last week after Fed Chair Powell said that the economy is not sending any signals that de Fed needs to be in a hurry to lower rates. Boston Fed Collins yesterday suggested that some additional policy easing is needed as policy currently remains at least somewhat restrictive but that the final destination is uncertain. Policy makers should proceed carefully though. “The policy adjustments made so far enable the FOMC to be careful and deliberate going forward, taking the time to holistically assess implications of the available data for the outlook and the associated balance of risks” Washington-based Fed governor Bowman – who dissented in September in favour of a smaller 25 bps rate cut - sounded equally cautious, citing risks of prematurely fueling demand and reigniting inflationary pressures. Interestingly, she says that we may be closer to a neutral policy stance than we currently think. Fed governor Cook also didn’t want to frontrun the outcome of the December meeting, hinting that she is ready to respond to a changing outlook. NY Fed Williams was more neutral. His 2025 outlook is one of still solid growth (2.5%), a sideways moving labour market (4%-4.25% unemployment rate) and a continuation of the disinflation process (2.25% for the full year). In this context, he argues that it is appropriate to bring the Fed funds rate down closer to more normal or neutral levels. Today’s eco agenda again fails to inspire, leaving space for more choppy consolidation trading in the run-up to tomorrow’s PMI surveys.

News & Views

Japan’s public broadcaster NHK said the government is considering a new stimulus package worth JPY 13.9tn, or about $90bn, aimed at mitigating the impact of rising prices on households. The package would also contain around JPY 8tn for government investment and lending as well as local government spending, raising the total size to JPY 21.9tn to top last year’s JPY 21.8tn fiscal booster. Japan’s ruling coalition yesterday agreed with a key opposition party on the draft of the package. While these kind of supplementary budgets are not unusual in Japan, their size seem to be ever-increasing. They are also largely debt-funded. The IMF earlier this month warned Japan to fund additional spending plans within its budget rather than issue debt. It urged Japan to get its fiscal house in order as the central bank began raising interest rates. The Japanese yen this morning oscillates around USD/JPY 155.

Advisers to the Chinese government are recommending the country to stick to a 5% growth target for 2025, Reuters reported. Such growth ambitions match those for this year, which already prove difficult to reach. The advisers push for stronger fiscal stimulus to offset the impact of potential US tariff hikes on Chinese exports. One of them said the budget deficit should “definitely exceed” this year’s planned 3% level of GDP. Another was more conservative, calling solely relying on fiscal stimulus not sustainable in the long run if China does not go ahead with much-needed reforms to address structural imbalances. The advisers will submit their proposals to next month’s annual Central Economic Work Conference, where leaders discuss policies and goals for next year. The growth target will be officially announced at an annual parliament meeting in March.

Nvidia announced another very strong quarter after the bell. The company surpassed its own revenue forecast by around $2bn (again!) and printed a sales number of $35.1bn. That’s around $5bn more than last quarter’s number and almost the double of the amount earned during the same period a year ago. The company printed a total profit of an eye-watering $19.3bn – that’s also around $2bn more than pencilled in by analysts. And it made a revenue forecast of $37.5bn for the current quarter. That’s $2bn more than the actual revenue – as it has been the case for the past few quarters – but only slightly above the consensus of $37bn.

To me, being lower than the most optimistic of the Wall Street forecasts is not a concern, bit there are two flags that are emerging right now.

• The company’s gross margin slightly fell last quarter from 75% to 74.6%. This number is still around 20 percentage points above AMD’s profit margin and more than double Intel’s BUT the switch to the now-famous Blackwell chip - and the manufacturing challenges, there – has been costlier than thought and took a toll on the profit margin. And Nvidia expects its gross margin to dip to 73% before rebounding back to mid-70s as it reaches large-scale production.
• Happily, demand for Blackwell chips is expected to exceed supply for a few more quarters but the composition of Nvidia’s customer book worries. Big Tech companies make up to 50% of revenues – up from 45% a quarter earlier. And these companies will be done buying chips at large-scale at some point. And come that day, Nvidia must find new clients. The problem is that companies other than Big Tech certainly don’t have the same means to make Nvidia’s bread and butter when competition proposes more affordable AI chips. Hence, competition and market share will become a challenge.

Nvidia fell 2.5% in the afterhours trading. Failure to break a record post-earnings, and the rising worries regarding margins and competition could lead to a certain profit taking over the next few sessions. The 100-DMA – near $125 per share – should provide the first important support to a potential pullback. We expect dip buying opportunities to emerge into $117pb – the minor 23.6% Fibonacci retracement on the AI rally.

But one thing is clear, yesterday’s announcement sounded like the next few quarters won’t be as fun as the last few ones.

As such, the S&P 500 and Nasdaq futures are in the red this morning, and we could see a deeper retracement from the ATH levels with the lack of support from Nvidia earnings.

Elsewhere, the US 20-year note sales saw a tepid demand, and Federal Reserve’s (Fed) Michelle Bowman called for caution on further rate cuts citing at slower progress in reducing inflation. The US 2-year yield rebounded yesterday, as the 10-year yield steadied near 4.40% level. Activity on Fed funds futures points at a near 50-50 chance for the December rate cut right now, and that hawkish shift in Fed expectations continues to give support to the US Dollar new a year-high levels.

This being said, the major counterparts also see some hawkish shift to their own expectations, and the latter slows the US dollar purchases. The UK, for example, printed a higher-than-expected set of inflation figures yesterday morning. Headline inflation in the UK jumped to 2.3% and core inflation to 3.3%. The jump in numbers was expected for October amid a 10% rise in the British energy price cap, but the higher-than-expected figures tamed the dovish Bank of England (BoE) expectations. And because things are expected to get worse before they get better with Donald Trump’s tariff plans and the expansionary fiscal policy from the British government, the first rate cut from the BoE is fully priced in for March, and a second for August. That hawkishness gave an energy shot to the GBP bulls yesterday, although most of the gains were given back rapidly on Fed hawkishness. Moving forward, a smaller divergence between the Fed and the BoE outlook should help throw a floor under Cable near the current levels and encourage recovery in the coming weeks.

Across the Channel, news weren’t encouraging for the European Central Bank (ECB) doves, either. Wages in the Eurozone jumped by 5.4% from a year ago, the most since the single currency exists. Germany is to blame. Wages, there, jumped by 8.8% in Q3 from a year earlier. The jump in wages growth will complicate the ECB’s plans to cut rates at the desired speed. Consequently, the retreat in dovish ECB expectations could slow down the euro selloff, and levels near $1.05 could serve as a dip to shoulder a rebound toward the 1.07-1.08 range.

In focus today

Today, in the euro area we receive data on consumer confidence for November. We have seen a strong upward trend the past year, which bodes well for consumption next year if it continues.

In Sweden, we have a speech by Riksbank vice governor Per Jansson at 14:45 about the economic situation. According to the Minutes, Jansson cited a slower-than-anticipated economic recovery as his reason for supporting a 50bp rate cut. He concluded that overall inflation risk is trending downward, although he balanced that by highlighting two upside risks: the krona and food prices, which in the worst case could delay rate cuts or even justify hikes.

In the US, we receive initial jobless claims and the Philly Fed Business index for November, which measures growth in the manufacturing sector, where consensus suggests 8.0.

Several central bank speeches from both ECB and Federal Reserve again today including Knot, Holzman and Lane, where the market will look for clues on monetary policy ahead of December announcements.

Overnight, the Japanese Statistics Bureau publishes inflation data for October. Tokyo data indicates, inflation declined further, but price momentum rhymed with 2% annual inflation. Consensus sees 2.2% with September inflation of 2.4%. This will be the last nationwide print ahead of the December BoJ meeting.

Economic and market news

What happened overnight

In the US, Yesterday's auction of USD 16bn in the 20Y was very weak with a very high tail and low demand from direct bidders. However, the 20Y segment on the US Treasury curve usually attracts low demand as it is a new segment on the yield curve (was introduced in 2020) similar to what we see on the German curve, where the 15Y-20Y segment also attracts low demand and have to offer an extra premium to investors. Hence, it should not have significant impact on the long end of the Treasury curve.
What happened yesterday

In the euro area, negotiated wage growth increased to 5.4% y/y in Q3 from 3.5% in Q2, influenced by seasonal factors such as bonuses and recent increase in German special payments. Despite this volatility, average negotiated wages have now increased 4.6% y/y, up from 4.4% y/y in 2023, indicating persistently strong wage trends. This sustained wage growth is expected to continue influencing services inflation. However, the ECB's focus has shifted from inflation concerns to growth, lessening the impact of the data on future policy rate decisions.

In the UK, October's inflation figures surpassed expectations with headline CPI at 2.3% y/y (cons: 2.2%, prior: 1.7%), and core CPI at 3.3% y/y (cons: 3.1%, prior: 3.2%). The rise in the headline is primarily due to quarterly adjustments in household energy bills. Given this, we therefore caution reading too much into this print given the significant impact of energy costs.

Equities: Global equities were marginally lower yesterday, and it was definitely not the Trump trades outperforming. Health care is finally showing some defensive characteristics after having faced several challenging weeks following the elections. Materials also outperformed on a negative day, a sector which has also been challenged over the last couple of weeks but that's more related to disappointing Chinese stimulus. European stocks once again started the day in the green before ending in the red. This illustrates quite well the investor scepticism, fear, and uncertainty related to geopolitics, German politics, struggling manufacturing sectors, and challenging structural outlooks related to Europe. What seems to be missing is the belief in potential upside surprises in Europe, despite economic surprises currently being positive for the region. In the US yesterday, Dow +0.3%, S&P 500 +0.00%, Nasdaq -0.1%, and Russell 2000 +0.03%. Asian markets are mixed this morning, with South Korea standing out once again, this morning on the positive side. European futures are higher - let's see if the strength can continue throughout the cash session. US futures are slightly lower but without a massive impact following the Nvidia earnings in the after-hours yesterday.

FI: Geopolitics continued to add downward pressure on global rates through yesterday's session. The EUR swap curve rose modestly across tenors during the first part of the session, but the move faded quickly as news of another Ukrainian attack on Russian soil reached the wire. The EUR swap curve ended the day marginally higher across tenors, while the Bund ASW-spread move slightly higher to 2-week high of 2.5bp.

FX: USD and CAD gained the most yesterday and NOK and SEK lost out on another relatively quiet day for the FX market. EUR/USD traded in the 1.05-1.06 range, EUR/SEK rose above 11.60 and EUR/NOK climbed towards 11.70.

Daily Pivots: (S1) 1.0497; (P) 1.0554; (R1) 1.0600; More...

Intraday bias in EUR/USD remains neutral as consolidation from 1.0495 is extending. Outlook stays bearish with 1.0760 support turned resistance intact. On the downside, firm break of 1.0495 will resume the fall from 1.1213 to 1.0447 support and then 1.0404 key fibonacci level next.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage. However, firm break of 1.0404 will raise the chance of reversal and target 61.8% retracement at 1.0199.