🟢Geo-political tensions

🟢USA government funding

🟢Iran sends forces to Syria in support to Assad

🟢Fed’s future rate cuts uncertainty

🟢The US Dollar derives strength from risk aversion on China’s woes

🟢Fed’s future rate cuts uncertainty

🟢Tuesday’s US JOLTs Job Openings data indicated a stronger-than-expected labor market

🟢Markets are currently pricing at a 73% probability of a Dec Fed rate reduction

🟢Gold price hinges on the US ADP Employment Change data & Fed Chair Powell’s speech

🟢The latest crackdown on China’s chip sector by US President Joe Biden’s administration.

🟢ADP, NFP to drive the price action

The previous week’s Bear Cross warrants caution for Gold buyers.

Tuesday’s US JOLTs Job Openings data indicated a stronger-than-expected labor market after rising to 7.744 million in the reported period. Data surpassed the expected 7.48M increase. The upbeat labor data from the US briefly lifted the US Dollar (USD) across the board, capping the Gold price rebound near $2,655.

If risk-aversion intensifies, Gold price could face a tailwind effect as it is considered a traditional safety net. However, the next directional move in Gold price hinges on the US ADP Employment Change data and Fed Chair Powell’s speech.

The US private sector is expected to see a job gain of 150K in November, compared to 233K in October. A worse-than-expected labor data could revive expectations of future Fed rate cuts beyond December, fuelling a fresh advance in the non-interest-bearing Gold price. But any reaction to the US data is likely to be shorted-lived as Powell’s words are set to shape up the market expectations of the Fed’s easing trajectory, influencing Gold price action in the lead-up to Friday’s US Nonfarm Payrolls data.

It’s worth mentioning that it will be Powell’s last appearance before the Fed enters the ‘blackout period’ on December 7 ahead of the December 17-18 policy meeting. Fed Chair Jerome Powell’s words are likely critical for the next directional move in Gold price.

Ongoing Geo-political Tensions

Iranian-backed Iraqi militias have reportedly deployed to northern Syria to help defend the Bashar al Assad regime against Syrian opposition forces. Iran is coordinating with Syria and Russia to counter the rebel offensive in Syria. Iran and Turkey continue to hold different desired political goals in Syria, which could cause increased friction as the Syrian opposition offensive continues. Hezbollah does not appear willing to commit fighters to assist its pro-regime allies in northern Syria, probably as a result of the severe losses it has suffered in Lebanon. Syrian opposition forces appear to be slowing their advance into regime-controlled areas of northwest Syria after encountering Syrian Arab Army (SAA) defensive lines north of Hama City. The Turkish-backed Syrian National Army (SNA) is similarly slowing its advance after accomplishing its main goal of seizing Tel Rifat, north of Aleppo, on December 1.

The United States and France reportedly warned Israel that it is violating the terms of the Israel-Lebanon ceasefire, according to Israeli media. Israeli media reported on December 2 that senior French and US officials, including US Special Envoy Amos Hochstein, told their Israeli counterparts that Israel was violating terms of the ceasefire agreement by conducting military activities in Lebanese territory and failing to report them to the designated oversight mechanism. Hezbollah fired two rockets at an IDF border position as a “warning” on December 2 in response to what Hezbollah described as Israeli ceasefire violations.

Key Takeaways:

• Iranian-backed Support to Syria: Iranian-backed Iraqi militias have reportedly deployed to northern Syria to help defend the Bashar al Assad regime against Syrian opposition forces.
• Hezbollah Support to Syria: It is not clear that Hezbollah can currently support a deployment of this size, given postwar commitments to reconstitute its forces. Hezbollah is regenerating and reorganizing its forces after a nearly two-month Israeli campaign in southern Lebanon that has severely degraded its command-and-control networks, communications, and weapons stockpiles. Regeneration and reorganization would need to occur before any forces can be deployed as units. It is possible, however, that Hezbollah could choose to deploy individuals to Syria to advise regime forces.
• Iranian Diplomatic Responses: Iran is coordinating with Syria and Russia to counter the rebel offensive in Syria. Iran and Turkey continue to hold different desired political goals in Syria, which could cause increased friction as the Syrian opposition offensive continues.
• Syrian Opposition Operations: Syrian opposition forces appear to be slowing their advance into regime-controlled areas of northwest Syria after encountering Syrian Arab Army (SAA) defensive lines north of Hama City.  The Turkish-backed Syrian National Army (SNA) is similarly slowing its advance after accomplishing its main goal of seizing Tel Rifat, north of Aleppo, on December 1.
• US-backed Syrian Democratic Forces: A local Syrian source suggested that the SDF may launch an offensive to seize Syrian regime-controlled territory in Deir ez Zor Province. The Deir ez Zor Military Council—an Arab-majority militia within the SDF—reportedly mobilized locals from seven villages on the left bank of the Euphrates River. These seven villages are the only areas east of the Euphrates that the regime controls, making it a strategic holding for the regime and its allies.
• Lebanon Ceasefire: The United States and France reportedly warned Israel that it is violating the terms of the ceasefire, according to Israeli media. The IDF has conducted numerous strikes into Lebanese territory since the ceasefire went into effect. Hezbollah fired two rockets at an IDF border position as a “warning” on December 2 in response to what Hezbollah described as Israeli ceasefire violations.
• Gaza Strip Ceasefire: Senior IDF officials have recommended that Israel propose a temporary ceasefire-hostage deal in response to Hamas’ perceived willingness to concede on some of its maximalist ceasefire demands.
• Syria’s civil war reignites in dramatic fashion as Russia joins airstrikes on rebels who seized Aleppo. The Syrian military and its ally Russia conducted deadly joint air raids Monday on areas that Islamist-led rebels seized control of over the weekend. The strikes were a response to a lightning offensive by the rebels that saw them wrest control of swathes of northwest Syria from government forces.
• US Central Command (CENTCOM) confirmed that the Houthis attacked two US Navy destroyers and three American-flagged commercial vessels on December 1.
• Iranian-backed Afghan Shia militia Fatemiyoun also sent reinforcements to help support the SAA and allied forces fighting the Syrian opposition forces.
• The Iraqi Parliamentary Security and Defense Committee held an emergency meeting on December 2 to discuss the repercussions of the rebel offensive in Syria on Iraqi security.
• The Iranian Artesh Ground Forces conducted a counterterrorism exercise along the northeastern border and frontier areas from December 1 to 2, involving rapid reaction units, drone forces, and aerial fire support units.
• Russia is evacuating naval assets from its base in Tartus, Syria, which may suggest that Russia does not intend to send significant reinforcements to support Syrian President Bashar al Assad’s regime in the near term.

• Russia is evacuating naval assets from its base in Tartus, Syria, which may suggest that Russia does not intend to send significant reinforcements to support Syrian President Bashar al Assad’s regime in the near term.
• The US announced additional military assistance worth $725 million for Ukraine on December 2.
• Russian officials continue to perpetuate information operations about prisoner-of-war (POW) exchanges in order to portray Ukraine as unwilling to negotiate and to undermine Ukrainians’ trust in their government.
• India is reportedly attempting to decouple its defense industry from Russia as it increases cooperation with Western defense companies and builds up its own defense industrial base (DIB).
• Ukrainian forces recently advanced in Kursk Oblast and regained lost positions near Kupyansk. Russian forces recently advanced near Toretsk, Pokrovsk, and Velyka Novosilka.
• Russian forces reportedly continued to suffer significant personnel and armored vehicle losses throughout November 2024 as they attempted to maintain intensified offensive operations in eastern Ukraine.

Source | Verify facts at:

www.understandingwar.org/backgrounder/iran-update-december-2-2024

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