The bullion stayed below the $1,200 level on Friday as a better-than-expected US non-farm employment report supported the US Dollar and reinforced the view the Fed will soon increase the borrowing costs. Investors fear higher rates would curtail the demand for the yellow metal, a non-interest-bearing asset. US employers hired the largest number of workers in almost three years in November and wage growth picked up, in a sign of economic strength that could prompt the Fed to hike interest rates. Thus, the precious metal is expected to be the most vulnerable in the short to medium term, which is when market participants see the highest possibility of a rate hike.
Moreover, average hourly earnings in the US climbed by 9 cents in November, which left them up 2.1% from the previous year, still well below the advance of 3% or more that economists say would make the Fed comfortable raising benchmark overnight rates from all-time low, where they have been since December 2008. A separate data showed the US trade deficit shrank 0.4% to $43.4 billion in October, but came in above the expected $41.2 billion and following an upward revised $43.6 billion gap in September. Exports rose 1.2% to $197.5 billion in October, while imports climbed 0.9% to $241 billion, which is a new record.
Gold to be driven by British and German data tomorrow
Among important fundamental factors, which are likely going to impact Gold's price the most, German statistical authorities will release in October's data for trade balance. As assumed, the surplus will remain on strong levels despite the stagnating economic climate in the Eurozone and geopolitical tensions. Along with that, UK trade balance statistics will be published on Tuesday and is expected to have some additional influence on the price of the yellow metal.XAU/USD to decrease trading range by the end of 2014
The long-term outlook for the XAU/USD cross remains bearish, taking into account the recent US dollar's bullish tendency across the market. The Gold entered a descending triangle pattern against the Buck, meaning that trading range o the pair will decrease soon. From above the long-term downtrend line is located around $1,220, while a support in face of 2014 low is placed at $1,131. By the end of the year we would suggest the Gold to hover around $1,150 per ounce, while in January it is likely to depreciate slightly to trade at 2014 low.Daily chart
The Gold registered a rather strong downside movement on last day of the previous week. The bullion lost more than ten US dollars to hover around $1,190 at the end of the session. At the moment the metal is well supported by the weekly pivot point and 20-day SMA just below the current level of trading. However, taking into account bearish technical studies on the weekly time-frame, we predict the Gold to breach this demand area in the medium-term.
Hourly chart