The strong U.S. labor market drives the dollar higher, suppressing gold's gains

According to Zhitong Finance APP, on Tuesday, spot gold prices fell slightly by 0.2%, closing in the range of $2,640 per ounce. Strong performance in the U.S. labor market data reinforced the view of a robust U.S. economy, while also boosting the dollar, putting pressure on gold priced in dollars.

According to data from the U.S. Bureau of Labor Statistics (BLS), the number of job openings in the U.S. rose to 7.744 million in October, exceeding the market's general expectation of 7.48 million and also higher than the revised 7.372 million in September. This data prompted gold to give back some of the earlier gains driven by comments from Federal Reserve officials.

Previously, remarks from Federal Reserve officials increased market expectations for a possible interest rate cut at the December policy meeting. Rate cuts are favorable for gold as they reduce the opportunity cost of holding non-yielding assets like gold. However, strong employment data put pressure on gold, limiting its gains.

Recent statements from officials such as Atlanta Fed President Raphael Bostic and Fed Governor Christopher Waller mostly leaned towards supporting a rate cut in December. Although New York Fed President John Williams maintained a cautious stance, he also believed that rates need to be lowered further to balance inflation and employment risks.

Additionally, the Chicago Mercantile Exchange FedWatch tool showed that the market's probability of a 25 basis point rate cut in December rose from the mid-60% range to 72.5%.

Despite the strengthening dollar and interest rate outlook putting pressure on gold prices, geopolitical risks continue to provide support for gold. Ongoing conflicts in the Middle East, the outbreak of the Syrian civil war, the escalation of the Russia-Ukraine conflict, and political risks in France have kept demand for gold as a safe-haven asset high.

From a technical perspective, gold prices are still fluctuating near the main trend line, showing a range-bound oscillation. Currently, gold may be forming a three-wave "Measured Move" pattern. If this pattern holds, the next wave could be a downward "c wave," targeting near $2,550.

If gold prices fall below $2,605 (the low on November 26), it will confirm a subsequent downward trend, with a target price near the end point of the "c wave" around $2,550. Furthermore, the MACD indicator recently fell below the red signal line and is in negative territory, issuing a bearish signal, supporting the view of a downward trend in gold prices in the short term