Gold makes a round trip leaving a daily doji on the charts, a warning to bulls

  • Investors presume that the Sino/US cease-fire will be broken and markets are roiled by such prospects.
  • Gold has made a round trip but holds the 38.2% fibo at 1238.

Spot gold has broken above the 38.2% fibo of the 2018 decline as investors run for the exits following a terrible start on Wall Street that has progressed into a bloodbath on Thursday ahead of the key nonfarm payrolls data to the end the week. Spot gold hit a high of 1244.49 from a low of 1234.71 following investor's concerns over Beijing's response to the arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies, by the Canadian authorities.

The fear sent equities off a cliff and futures selling was so dramatic at one point that circuit breakers were triggered. Gold was the obvious choice to run to, and it rallied sharply to break the 21-hr SMA and all resistance in its path until 1244.49. Gold then met strong supply as the dollar picked up a bid. Gold dropped back below the 21'hr SMA and currently hovers over the pivot of 1237.08.

The chief financial officer of Chinese telecoms company faces extradition to the US over possible violations of sanctions against Iran, but China is requesting that both Canada and the US to "rectify wrongdoing". Investors presume that this will break the cease-fire as Beijing responds with demands that may come beyond the realms of tariffs and into much broader economic and diplomatic conflict, with dire implications for global economic growth.

Nonfarm payrolls 

"FX likely to view payrolls with an asymmetric bias; USD has been stable despite aggressive Fed repricing so a payrolls beat should not impact the USD as much as a disappointment," analysts at TD Securities explained. 

  • The US initial jobless claims are expected to reach 224K in the week ending November 30

Gold levels

We now have a daily doji on the charts which should be a warning to bulls. Gold was capped through the top of the daily Bollinger band range at aforementioned 1244.49 highs and is now well finding a footing above the 38.2% fibo at 1238. However, if the dollar finds momentum, a break there will open the double bottom, 26/27th Nov lows at 1211 with the confluence of the 100 D SMA,  the double-bottom lows of 1,180 could be tested. On the upside, the 200-day SMA near 1,258 could be a healthy level of resistance ahead of the 50% Fibo level at 1,262.

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