Gold remains near record highs and achieved its highest monthly close ever in November. Global bond yields continue to decline as inflation further cools, supporting the upside in XAU/USD. With central banks expected to remain on hold, the focus will be US labor market data.  Gold decisively broke above the $2,010 level and moved closer to the record high area, boosted by a decline in global government bond yields. Evidence that inflation continues to edge lower in Europe and the US solidifies expectations that the Federal Reserve (Fed), the European Central Bank (ECB), and other central banks are finished with interest rate hikes. This has also bolstered equity prices and kept the US Dollar under pressure. Next week's data, particularly US jobs figures, could challenge the current market sentiment, sparking a new debate. Gold shines, inflation slows Gold not only broke above $2,000 but also surpassed the significant $2,010 level, positioning itself to challenge record highs. In November, XAU/USD achieved its highest monthly close ever. A key factor driving the increase in Gold prices was the decline in government bond yields worldwide. Data showed a slowdown in inflation in November in the US, Europe, and Australia at a faster-than-expected rate, to the envy of many Argentinians. In Germany, the annual rate of the Consumer Price Index (CPI) stood at 3.2%, while in the Eurozone, it was at 2.4% (with core inflation at 3.6%). These figures are closer to the European Central Bank's (ECB) target and suggest that no further tightening would be necessary in the near future. With a gloomy economic outlook ahead, the debate is shifting towards when the ECB will cut rates. This expectation has pushed European yields lower. While the European economy stagnates, the US continues to grow above trend. Market participants learned during the week that the US economy expanded at an annualized rate of 5.2% in the third quarter, higher than the previously reported 4.9%. This confirms that the US is still far from a soft landing. It does not imply that the Fed will raise rates further, but it leaves the door open for the central bank to do so if inflation rebounds. However, some warning signs are emerging. The Beige Book signaled that "business activity continued to decline slightly" from early October to November 17. Continuing jobless claims resumed an upward trend, surging by 86,000 in the week ending November 18, reaching the highest level since November 2021. Comments from Federal Reserve officials during the week varied. However, the overall tone remains that, for the time being, the Fed will maintain its policy unchanged, adhering to the "higher for longer" mantra. Doves mention that a sufficiently restrictive policy is in place, while hawks warn that they would support further rate hikes if "inflation progress stalls." Lower yields, a depreciation of the US Dollar, and higher equity prices point to loosening financial conditions, which do not support the Fed's intentions. This adds more pressure on officials to avoid a dovish tone. Focus on US jobs data  Next week, the Reserve Bank of Australia (RBA) will announce its decision on monetary policy with no expected change. The same applies to the Bank of Canada (BoC). Market participants won't be hearing from Federal Reserve officials as the central bank enters the blackout period ahead of the December 12-13 FOMC meeting. The crucial economic figures will come from the US labor market. On Tuesday, the JOLTS Job Openings report will be released, followed by the ADP Private Employment Change on Wednesday, and weekly Jobless Claims on Thursday. And finally, the Nonfarm Payrolls report on Friday. These figures could have an impact on Gold. Evidence of a more balanced job market will reinforce the notion that the Fed is done raising rates and could further boost the price of Gold towards record highs. Even numbers aligned with expectations could trigger more gains in XAU/USD. However, upbeat figures that show a still-tight labor market could strengthen the US Dollar and weigh on Gold. The uptrend for XAU/USD is likely to remain in place as the market focuses on the Fed not raising rates further. If the focus changes to the US economy outperforming, then the US Dollar could start gaining momentum and potentially limit the upside in metals. Given the current level of Gold price, this could lead to an intense correction.  Gold technical outlook The weekly chart shows that the upward trend in Gold is strong and points towards a test of record highs around the $2,085 area. A weekly close below $2,010 would suggest that XAU/USD is not yet ready for new historical levels. Technical indicators on the weekly chart are bullish. However, considering Gold's level, the upside is not risk-free and could be susceptible to sharp corrections. A decline below $2,010 could extend to $1,975, with...

EUR/AUD traded to 1.6303 target and a target first reported in August and September when EUR/AUD traded 1.7000's. EUR/NZD traded to 1.7508 lows from 1.8282. EUR/NZD achieved a 700 pip drop in 15 trade days while EUR/AUD trade duration was 15 weeks.  Best trades for profit this week are long EUR/AUD, GBP/AUD, EUR/NZD, GBP/NZD and EUR/GBP.  Overnight interest rates  Overnight interest rates of the eight major nations. NZD and RBNZ 5.50 DXY and Fed 5.33 GBP and BOE 5.18 CAD and BOC 5.02 EUR and ECB 3.89 AUD and RBA 4.35 CHF and SNB 1.70 JPY and BOJ 0.98 The Mid point of the range is located at 3.24 and a total range  from 5.72 – 2.26. BOJ is subtracted as BOJ interest rates won't  move anytime soon then the range becomes 5.75 – 3.09.  RBNZ interest rates historically trade above the FED and the RBNZ is the central bank to watch for the first rate cut and signal among the G 8 nations. EUR and ECB rates traditioally trade below Fed rates. The question to successive interest cuts is not seen but rather a slow gradual process over a long period of time if and /or when a drop cycle begins.  The week With the exception of USD/JPY and JPY cross pairs, currency prices will trade 200 pip ranges for the week and not break significant averages. EUR/USD for example will hold 1.0832, GBP/USD 1.2400's, AUD/USD 0.6500's and NZD/USD 0.6041. USD/JPY twice last week broke vital levels at 147.50's to trade 146.65 lows. The current levels at 147.37 is not only significant but historic as the break was anticipated all 2023.  USD/JPY 2022 – 2023 = 114.64 to 151.94. Then 2023 = 151.94 to 127.21. Current 127.21 to 151.90 is on a massive correction to target 144.00's and 138.01 longer term. For the week, next targets are located at 146.22 and 145.07.  USD/JPY above 147.37 targets 147.95 and 148.23 however USD/JPY remains deeply overbought longer term and overbought from 5, 10 and 14 year averages.  The wild card to currency pairs this week is JPY cross pairs. AUD/JPY and NZD/JPY trade severely overbought while EUR/JPY begins the week at vital 159.62, CAD/JPY at 108.29 and GBP/JPY at 184.23.  The positive to USD/JPY and JPY cross pairs is the + 90% correlations as JPY cross pairs will trade lower along with USD/JPY. EUR/JPY long term targets: 157.78, 150.05, 145.89 and 143.39. Count 1000 pips lower at JPY bare minimums and GBP/JPY targets 176.00's, CAD/JPY 98.00's, AUD/JPY 87.00's, NZD/JPY 81.00's and CHF/JPY 158.00's.  USD/CAD and USD/CHF begin the week massive oversold while among CHF cross pairs, oversold is located with EUR/CHF and CAD/CHF.  Overbought remains to GBP/CAD, EUR/CAD, AUD/CAD and NZD/CAD.  WTI As WTI dropped from 95.00's, resistance points built into the price at every point up to 95.00's. Higher for WTI must break 76.76, 77.88, 83.60, 84.48. Targets over next weeks are located at 70.45 and 68.74 SPX500 Overbought begins at high 4600's to low 4700's. Mucg lower must break a sold line at 4300's. 

After encouraging inflation data in early summer, progress stalled in August and September amid robust consumer activity. But with tighter financial and credit conditions set to weigh further on corporate pricing power, supplemented by slowing rents and falling gasoline and used car prices, we expect to see inflation move close to 2% in 2Q. Progress being made, but the Fed wants much more At the recent FOMC press conference, Federal Reserve Chair Jerome Powell said that the economy has "been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that has been very typical of rate hiking cycles like this one". Nonetheless, there was the acknowledgement that "the process of getting inflation sustainably down to 2% has a long way to go". Headline US consumer price inflation has indeed fallen sharply from a peak of 9.1% year-on-year in June 2022, hitting a low of 3% in June 2023. However, this stalled in August and September with the annual rate rebounding to 3.7% as higher energy costs and resilience in some of the core (ex-food and energy) components re-emerged amid a strong summer for consumer spending. The annual rate of core inflation has continued to soften from a peak of 6.6% in September 2022 to 4.1% currently, but it is still running at more than double the 2% target. In an environment where the economy has just posted 4.9% annualised GDP growth in the third quarter and unemployment is only 3.9%, there are several hawks on the FOMC who continue to make the case for additional interest rate rises, arguing that they cannot take chances and allow any opportunity for inflation pressures to reignite. Contributions to US annual consumer price inflation (YoY%) Source: Macrobond, ING But the Fed's work is most probably done The Fed is still officially forecasting one further 25bp interest rate rise this year, but we doubt it will follow through. The Fed last hiked rates in July and since then financial and credit conditions have tightened, with residential mortgages and car loans now having 8%+ interest rates while credit card borrowing costs are at all-time highs and corporate lending rates are moving higher. It isn't just the rise in borrowing costs that will act as a brake on economic activity and constrain inflation pressures. The Federal Reserve's Senior Loan Officer Opinion survey shows that banks are increasingly reluctant to lend. This combination of sharply higher borrowing costs and reduced credit availability tends to be toxic for growth. The Fed itself has reported significant weakness in loan demand while commercial bank lending data shows a clear topping out in the amount of borrowing conducted by households and businesses. With real household disposable incomes falling for the past four months amid evidence of increasing numbers of households having exhausted pandemic-era savings, we expect to see GDP contract in at least two quarters in 2024. In this environment, we see the slowdown in inflation regaining momentum in early 2024. Corporate pricing power is waning With business attitudes becoming more cautious on the economic outlook we are seeing a reduction in price intention surveys. The chart below shows the relationship between the National Federation of Independent Businesses' (NFIB) survey on the proportion of members expecting to raise prices in coming months and the annual rate of core inflation. It suggests that conditions are normalising, with core inflation set to return to historical trends. NFIB price intentions surveys suggest corporate pricing power is normalising Source: Macrobond, ING While concerns about the outlook for demand are a key factor limiting the desire for companies to raise prices further, a more benign cost backdrop has also helped the situation. The annual rate of producer price inflation has slowed from 11.7% to 2.2%, having dropped to just 0.3% year-on-year in June while import prices are falling outright in year-on-year terms. There are also signs of labour market slack emerging, with unemployment starting to tick higher and average hourly earnings growth slowing to 4.1% from near 6% just 18 months ago. Perhaps more importantly, non-farm productivity surged in the third quarter with unit labour costs falling at a 0.8% annualised rate. With cost pressures seemingly abating from all angles, this should argue for core services ex-housing, a component that the Fed has been keeping a careful eye on, to soften quite substantially over coming months. Fed's "supercore" inflation should slow more rapidly Source: Macrobond, ING Energy and vehicle price falls to depress inflation Another area of recent encouragement is energy prices. The fear had been that the conflict in the Middle East would have consequences for energy markets but, so far, we have seen energy prices soften. Gasoline prices in the US have fallen 50 cents/gallon between mid-September and early November, leaving it at its lowest level since early March. Gasoline has a 3.6% weighting...

Summary Despite the 525 bps of rate hikes that the Federal Open Market Committee (FOMC) has implemented since March 2022, the U.S. economy generally remains resilient due, in large part, to continued strength in consumer spending. Meanwhile, inflation has receded. We believe it would be premature to claim that the economic storm has passed, because the battle against inflation has not yet been decisively won. There already are some cracks that are beginning to appear in the economy, and these strains likely will intensify in the coming months as monetary restraint remains in place. Our base case is that real GDP will contract modestly starting in mid-2024. We look for the FOMC to cut its target range for the federal funds rate by 225 bps by early 2025, which is more than both Fed policymakers and market participants currently project. Even if Fed policymakers are able to pull off a "soft landing," real GDP growth in 2024 likely will be subpar, at best, due to the elevated level of real interest rates that will be needed to wring inflation out of the economy. The Sun Belt and Mountain West have outperformed the Northeast and the Midwest in recent years, and these trends likely will remain in place for the foreseeable future. In the commercial real estate market, storm clouds hover above the office sector and the multifamily sector. Fundamentals in the retail and industrial sectors are stronger. We believe the global economy will face an unsettled climate in 2024, and the economic storm could be quite severe at certain times and for certain economies. In our view, the Eurozone and United Kingdom will be the hardest hit. China's economy likely will continue to face structural headwinds to growth. In contrast, the economic outlook for 2024 remains relatively sunny and clear in India. The U.S. dollar should generally remain well-supported versus most foreign currencies in the first half of 2024. We then look for the trend of U.S. dollar strength to eventually wane and turn to U.S. dollar weakness later in 2024 as the Fed eases monetary policy.  Download The Full Annual Economic Outlook

Easing inflation figures fueled speculation central banks will refrain from hiking rates further. The focus shifts to United States data next week, featuring the Nonfarm Payrolls report. EUR/USD turned bearish after meeting selling interest around a Fibonacci resistance level. The EUR/USD pair started the week on a strong footing but lost momentum and is set to close the week in the red, well below the 1.0900 mark. Market participants mainly traded on sentiment, betting against the US Dollar amid optimism about a change in the monetary policies' tightening cycles worldwide. European Central Bank officers take down the tone European Central Bank (ECB) President Christine Lagarde gave different speeches throughout the week, repeating her well-known message about the risks of higher inflation and the need to keep interest rates higher for longer. However, different ECB officials eased their tone and started skewing to the dovish side. ECB Governing Council member Yannis Stournaras warned about premature bets on rate cuts but added he would expect such a move in mid-2024, earlier than that could be a bit optimistic, according to Stournaras. Also, ECB executive board member and Governor of the Bank of Italy Fabio Panetta said that the current interest rates level is consistent with bringing inflation down to target and warned about the "unnecessary damage" the ECB could cause through sustained high-interest rates. Furthermore, the Euro dived on Thursday amid rumors suggesting the central bank could pause the Pandemic Emergency Purchase Programme (PEPP) reinvestments in the last days of 2023 on low liquidity. At this point, financial markets are pricing a first ECB cut in April. Dovish surprise from Federal Reserve officials Across the pond, dovish comments from Federal Reserve (Fed) officials shocked investors. Fed Governor Christopher Waller said that the recent slowdown in economic activity is encouraging, as it may indicate that the monetary policy is tight enough to contain inflation. Waller added that if inflation continues to fall for several more months, the central bank could lower the policy rate. Meanwhile, Chicago Fed President Austan Goolsbee said overall, there has been progress on inflation, noting that "it's been coming down, it's not yet down to target but 2023 we're on path to set the highest drop in the inflation rate in 71 years." Macroeconomic data points to no more rate hikes Inflation took centre stage these last few days, with figures fueling optimism as price pressures declined at both shores of the Atlantic. Germany's Harmonized Index of Consumer Prices (HICP) inflation printed at 2.3% YoY in November, easing from 3% in the previous month. The Eurozone HICP in the same period was up 2.4%, down from 2.9% in October. Finally, the United States (US) published the October Personal Consumption Expenditures (PCE) Price Index, the Fed's favorite inflation gauge. According to the Bureau of Economic Analysis (BEA), the core annual PCE Price Index rose 3.5% YoY, as expected, yet below the 3.7% recorded in September. Meanwhile, the US upwardly revised the Q3 Gross Domestic Product (GDP), which registered an annualized pace of growth of 5.2%. German Retail Sales came in better than anticipated, up 1.1% MoM in October. Finally, the US published the ISM Manufacturing PMI, which resulted at 46.7 in November, matching October reading and missing expectations of 47.6. Focus shifts to employment   Overall, data suggests that growth remains solid while inflation continues to recede. The labor market needs to loosen further for central banks to confirm a monetary policy shift. Speculative interest keeps increasing bets on soon-to-come rate cuts among major economies and prefers to ignore warnings from policymakers that rates will remain higher for longer. The macroeconomic calendar has little interest figures next week. Multiple ECB officials will be on the wires on Monday, but silence will reign among US policymakers ahead of the December monetary policy meeting. The Eurozone will release a revision of the Q3 GDP. Still, the focus will be on US employment figures, as the country will publish the Nonfarm Payrolls report on Friday, preceded by the usual ADP survey, JOLTS Job Openings, quarterly Unit Labor Cost and Nonfarm Productivity reports. EUR/USD technical outlook The EUR/USD pair briefly traded above the 61.8% Fibonacci retracement of the 1.1275/1.0447 slide at 1.0960, ending the week below the 50% retracement at 1.0861. The fact that such a critical resistance level held, is quite a sign for sellers, as it opens the door for another leg south. The weekly chart for EUR/USD shows the positive momentum has receded. Technical indicators have lost their bullish strength and turned neutral-to-bearish within neutral levels. At the same time, the pair remains above its 20 and 100 Simple Moving Averages (SMAs), but they head marginally lower, suggesting declining buying interest. Technical readings in the daily chart anticipate that EUR/USD can extend its slide. Technical indicators head firmly south, although they still...

Gold price is back under $2,100, consolidating the upsurge to fresh record highs of $2,144. Renewed geopolitical tensions, Fed rate cut bets and thin liquidity triggered a sharp Gold price rally. Golden Cross remains in play amid overbought RSI on the daily chart. Where is Gold price headed next? Gold price is consolidating the sharp pullback from fresh record highs of $2,144 reached in early Asia on Monday. Gold price is back under the $2,100 level, as the dust settles over the massive volatility seen in Gold price at the start of the United States (US) Nonfarm Payrolls week.   Gold price outshines amid supportive fundamental factors Multiple factors can be attributed to the latest upsurge in Gold price, as buyers built on Friday's rally at the start of the week on Monday. Gold price benefited from a fresh boost of safe-haven flows, in the wake of fresh geopolitical risks emanating between Yemen and the US over the weekend. The US military said on Sunday that Yemen's Houthi rebels fired ballistics missiles and struck three commercial ships in the Red Sea. In retaliation, a US warship shot down three drones during the hours-long assault. The US military's Central Command said in a statement, "these attacks represent a direct threat to international commerce and maritime security. It added that "we also have every reason to believe that these attacks, while launched by the Houthis in Yemen, are fully enabled by Iran." These tensions add to the already persistent conflict between Israel and Hamas, as the truce failed on Friday after Israel accused Hamas of violating the ceasefire agreement. Israeli military resumed combat operations against Hamas, resuming hostilities in the Gaza Strip. Gold price is considered a traditional safe-haven asset and tends to benefit from escalating geopolitical tensions. However, another safe-haven currency, the United States Dollar (USD) fails to find any inspiration from fresh geopolitical risks, as bets for a Fed interest rate cut in March ramp up, with markets pricing as much as a 60% probability of a March Fed rate cut. Fed Chair Jerome Powell's efforts on Friday to push back against expectations of a policy pivot next year failed, as markets didn't buy into his hawkish rhetoric amid cooling inflation in the US. "It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease," Powell said in his prepared remarks for an audience at Spelman College in Atlanta. "We are prepared to tighten policy further if it becomes appropriate to do so," he added. Further, thin liquidity conditions in early Asian dealing at the weekly open also contributed to the sharp uptick in Gold price, as markets also believe that such a move also came in after stops got triggered on a break of the previous all-time-high of $2,079 and the $2,100 psychological level. Meanwhile, a recent survey by the World Gold Council (WGC) revealed that 24% of all central banks intend to increase their gold reserves in the next 12 months, as they increasingly grow pessimistic about the US Dollar as a reserve asset. This encouraging news also boded well for the Gold price. Looking ahead, it remains to be seen if Gold price finds a fresh impetus to resume the upside, as the US Dollar could draw support from the Middle East geopolitical tensions. Although dovish Fed expectations are likely to dominate risk sentiment and the US Dollar valuations, as traders brace for the key US employment data due later this week. Therefore, Gold price is expected to remain at the mercy of the US Dollar dynamics and Fed expectations, as the US Treasury bond yields take a breather from the recent sell-off. Geopolitical developments will also play part in driving the Gold price action. Gold price technical analysis: Daily chart The extent of the advance in Gold price early Monday, suggests that a sharp correction remains in the offing, especially as the 14-day Relative Strength Index (RSI) indicator remains well within the overbought territory. The latest retracement could gather pace if the intraday low of $2,072 caves in. The next strong support is seen at the $2,050 psychological level, below which floors could reopen for a test of the $2,000 threshold. However, any downside is likely to remain cushioned and could be seen as a good buying opportunity amid a Golden Cross in play. The 50-day Simple Moving Average (SMA) yielded a weekly closing above the 200-day SMA, confirming a Golden Cross on Friday. A daily closing above the $2,100 level is needed to initiate a sustained uptrend toward the $2,200 mark. Ahead of that, the record high of $2,044 will act as a stiff resistance.