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      Macroeconomic Bullishness Struggles to Mask Technical Pressure, and Bulls Face Test of Mean Reversion

      Eva Chen

      Commodity

      Summary:

      Gold prices climbed to near a seven-week high during European early trading on Wednesday. Continued cooling in the U.S. labor market weighed on the dollar and boosted gold prices.

      Sell

      XAUUSD

      End Time
      CLOSED

      4370.00

      Entry Price

      4065.00

      TP

      4398.00

      SL

      4405.17 +66.64 +1.54%

      1916

      Points

      Profit

      4065.00

      TP

      4350.84

      CLOSING

      4370.00

      Entry Price

      4398.00

      SL

      Fundamentals

      Following Tuesday's sharp volatility, gold prices resumed their upward trajectory on Wednesday; the continued cooling of the U.S. labor market weighed on the dollar and boosted gold prices.
      Labor market data for October and November in the U.S. clearly revealed a weakening job market. Nonfarm payrolls plunged by 105,000 in October, marking the sharpest monthly decline since late 2020. While nonfarm employment rebounded by 64,000 in November—exceeding expectations—the increase was insufficient to offset the previous month's contraction. As a result, overall job growth has remained largely flat since April.
      Labor market weakness continued to intensify. The unemployment rate rose to 4.6% in November, exceeding expectations and surpassing September's 4.4%. Meanwhile, the labor force participation rate edged up to 62.5%, indicating that the rise in unemployment was partly attributable to workers re-entering the labor market rather than direct layoffs.
      Wage growth provided little counterbalance. Average hourly earnings rose just 0.1% month-over-month, well below the previously expected 0.3%, further indicating that wage pressures are easing as labor demand cools. Weak net job gains, a rising unemployment rate, and slowing wage growth collectively reinforce the view that momentum in the U.S. labor market is weakening.
      Looking ahead, the U.S. Consumer Price Index for November, released on Thursday, will be the market's focus. The Personal Consumption Expenditures (PCE) Price Index will be released on Friday. These reports may influence market expectations regarding the Federal Reserve's interest rate cuts.
      Macroeconomic Bullishness Struggles to Mask Technical Pressure, and Bulls Face Test of Mean Reversion_1

      Technical Analysis

      On Wednesday, as the spot market entered the European session, the strengthening recovery momentum of the U.S. dollar limited gold's upside potential, but cautious market sentiment helped the asset maintain stability.
      However, judging by the medium-term trend of this asset, I reiterate yesterday's view: the reversal between price peaks and bottoms will ultimately revert to the mean. The path of least risk is downward.

      Trading Recommendations

      Trading Direction: Sell
      Entry Price: 4370
      Target Price: 4065
      Stop Loss: 4398
      Valid Until: January 2, 2026 23:55:00
      Support: 4307, 4297, 4281
      Resistance: 4342, 4353, 4365
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      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

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