Gold dips in 2020, watch out for this storm in the United States today

After the crazy Monday, Tuesday (December 5) entered the European market, the volatility of spot gold fell significantly, and the price of gold was slightly pressured during the day, once approaching 2020 US dollars. The change in the expectation of the Federal Reserve's interest rate cut suppressed the rise in gold prices. The market focused on US employment data this week, and before that, the US job vacancy data will be ushered in today.

Gold rallied on Tuesday as the U.S. dollar and U.S. Treasury yields fell after traders slightly scaled back bets on a Federal Reserve rate cut in Quarter 1, 2024.

After rising and falling back yesterday, spot gold is currently consolidating at a low level, trading around $2025, with a daily minimum of $2022, and the fluctuation range does not exceed $20.

Stabilization after gold riots

On Monday, gold prices surged to an all-time high of $2,135.40 an ounce, before falling more than $100 in a day and closing down 2%.

The dollar index fell 0.1% and the 10-year Treasury yield fell to 4.2375%, making gold less expensive for holders of other currencies.

Ilya Spivak, global head of macro at Tastylive, said that even after the big moves in gold prices over the past 24 hours, "the overall trend for gold still looks bullish for now".

Spivak added that gold prices appeared to have triggered a wave of profit-taking after the week's sharp opening to catch up with Fed Chairperson Jerome Powell's dovish comments on Friday, while "pre-positioning ahead of the risk of events this week".

However, the Chicago Mercantile Exchange's FedWatch Tool shows that traders have reduced their bets on a rate cut by the Federal Reserve by March next year to around 60% from 70% early on Monday.

Investors are awaiting Friday's closely watched U.S. nonfarm payrolls data, which could help further gauge the outlook for interest rates.

The focus now shifts to US job openings later on Tuesday and employment data on Friday, both of which could spook dollar bears.

Lower interest rates reduce the opportunity cost of holding interest-free gold.

Russell Shor, a market expert at FXCM, said conflicts in the Middle East and fears of contagion had prompted an influx of money into gold.

Reuters technical analyst Wang Tao said that spot gold could test the $2009 support level, and if it falls below that level, gold prices could move towards $1,980.

Gold soaring prompts Indians to recycle jewelry for weddings

As for physical gold, surging prices are prompting some Indians to swap out their gold jewellery for new ones as demand rises during the wedding season in India, the largest consumer of the precious metal after China.

Surendra Mehta, national secretary of the Bullion and Jewellery Association of India, said more and more Indians are looking to go back to gold, and rising prices mean imports will continue to come under pressure in the coming months. Consumers have been buying wedding-related products, he said, but otherwise they have largely stayed away from the market.

Spot gold jumped to a record high on Monday, rising more than 10 per cent since the start of October on speculation that the US Federal Reserve will cut interest rates early next year, as a weaker rupee made gold more expensive in India, which is totally dependent on imports.

"Buying wedding items is inevitable," said Ashish Pethe, a partner at jewelers Waman Hari Pethe. Jewelry prices in India have been hovering around 60,000 rupees ($720) per 10 grams, he said, and some consumers have been adjusting their purchases to trade in.

Wearing and giving away gold at weddings is considered auspicious, and Indians spend a lot of money on jewelry. Most Indians get married between November and February.

Indian households and temples collectively hold about 25,000 tonnes of gold. The country imported 220 tonnes in the July-September quarter, up 19 per cent on the same period last year.