Key Fundamental Changes in the first trading week of 2023:

1. On Wednesday, 04 January 2023: Gold price rallied to eight-month highs around $1,865.15, though slightly retraced some of its gains amidst an upbeat market sentiment, spurred by China’s support to its housing market, alongside its border reopening, as it relaxes Covid-19 zero-tolerance measures.

2. On Thursday, 05 January 2023: 10-year US Treasury yields have climbed above 3.72%, portraying ambiguity in market sentiment. After the release of the Federal Open Market Committee (FOMC) minutes, which has cleared that no Federal Reserve (Fed) policymaker has advocated for cutting interest rates in CY 2023, the street is looking for United States employment data. Only a significant drop in the employment addition numbers and an increase in the Unemployment Rate could force the Fed to look for policy stability or easing it to dodge recession fears.

3. The US Dollar Index(DXY) dropped below the 104.00 support after 10-year US Treasury yields witnessed immense pressure and scaled down to near 3.69%. Safe-haven assets are facing pressure on expectations of further decline in the inflationary pressures. Federal Reserve (Fed) chair Jerome Powell shifted to a slowdown context in the extent of an interest rate hike in December after remaining aggressive for the entire year. No doubt, the inflation rate is still extremely far from the 2% target, however, the presence of catalysts that advocates further slowdown in the price index is weighing on safe-haven assets.

4. The yen advanced to a six-month high versus the dollar as Japan’s decision to raise its bond-yield cap last month stoked bets the nation may tighten policy even more.

The yen has now climbed more than 16% from a three-decade low of 151.95 per dollar set in October. The recovery has been driven by government intervention to support the currency, the outlook for slowing US interest-rate hikes, and speculation the BOJ is about to unwind its ultra-accommodative monetary policy, which will push up bond yields and lure funds to the nation’s assets.

Figure: Reading Summary: XAUUSD co-relations | CMP $1836

A rise in Dollar Index was observed from 103.00 zone till 105.000 zone in last three days, US10YT crashed from 3.810 zone till 3.700 zone. USDJPY started rising from 129.900 zone and marked a high of 134.300 making a perfect V formation on H4 chart in last three days.

In current scenario, and as per past data fundamentals-based co-relations have guided us in a more accurate manner than technical co-relations, however I prefer to compare and match both to stay updated.

How to trade Spot Gold XAUUSD on NFP data today?

XAUUSD Bearish Scenario: $1800/1777/1735?

If the bearish momentum extends, gold price may fall further towards $1777 zone (after 1802) with 1755/1735 as next stops, if Gold crash halts at 1735 zone a reversal can be expected with a RT 23.6 on M5 and M15 30% RT before/in next 7 trading days.

XAUUSD Bullish Scenario: $1866/1888?

If the Bullish momentum pushes Gold price across $1854 barrier, $1866 and $1888 followed by $1907 zone can be the next target for Gold, opening way to $1926 zone.

Heading into the NFP show today, Spot Gold price is under a price trap of $1836 zone, as investors/traders are observing market closely after policy stability based interest rate and monetary policy related statements by Mr. Powell.

The US NFP will emerge as one of the main market driver for Gold price and FED rate forecasts scheduled to be announced on 01 February 2023. Point to be noted: let us not forget ongoing geo-political tensions between Russian – Ukraine and China – Taiwan which can trigger an upward price rally of more than $180-240 in Spot Gold price.

Technical Analysis | XAUUSD CMP $1836 | Gold Price – SR (D1) (MN) Levels to watch:

XAUUSD: Spot Gold Price Projection and Trading Scenarios | XAUUSD CMP $1836

PROJECTED TRADING SCENARIO:

• Observe price at US OPENING SS1 and then US SS2
• Observe MN.SR: S1 zone and R2/R3 zone for reversals/retracement, Target NAP $3
• Do not enter between the pivot zone
• Observe: FIB 23.6% on M5 and M15 TF for NAP target price based exit in buy or sell entry after 30/60/90/120 minutes of NFP and $18/36 price movement sets
  Long term: 12 (Short term)/20 (Long term) days for a A or V pattern formation
• Movement of $45/100 dollars on Gold price is not something unexpected nowadays, and a surprise on Monday during early trading hours cannot be ruled out too, so closing all positions today in net average profit is always the best trading strategy for every trader who wants to safeguard his principle.

I expect A pattern on H4 TF chart in next 7 days (short term target) and 12 trading days (long term target). XAUUSD CMP $1836.

BUY/SELL STOPS | B/S LIMITS: TARGET Net 23.6 RT on M5/15 or NAP:   

S1/S2 ZONE 1818 | DOWN TREND (Below 1802) : 1790/1777/1755/1740    | BUY LIMITS
R2/R3 ZONE 1888| UP TREND (Above 1854)        :  1866/1888/1907/1926   | SELL LIMITS

Terms: TF: Time Frame | RT: Retracement | SR: Support Resistance | NAP: Net Average Profit

It is always wise to first PLAN THE TRADE, and then TRADE THE PLAN!

Hence, it is suggested to first observe the crash or rise with specific zones and levels in mind on the basis of various fundamental and technical parameters mentioned above, before entering a trade in a specific direction with a target of net average profit in a specific set of trades.

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