Risk reduction drives market sentiment<\/p>\n
Gold<\/a>\u00a0is trading lower at $4031 (-0.35%) on Tuesday, 18 November on course for a fourth consecutive session of declines after shedding more than 4.5% from last week\u2019s high of $4245.<\/p>\n A perfect storm of bearish<\/a> pressures is weighing on the precious metal.<\/p>\n Broad-based risk reduction has swept through equities<\/a>, credit, foreign exchange (FX)<\/a> and commodities<\/a> as investors brace for NVIDIA’s<\/a> pivotal earnings on Thursday morning AEDT and the critical United States (US) September jobs report early Friday morning AEDT. Lingering concerns over private credit exposures<\/a> have only added to the tone of risk reduction.<\/p>\n This widespread deleveraging has fuelled a rebound in the US dollar<\/a>, which traditionally exerts heavy downward pressure on non-yielding bullion.<\/p>\n Fed signals and policy expectations weigh on gold<\/p>\n Gold\u2019s slide began in earnest last week after hawkish<\/a> remarks from several Federal Reserve (Fed)<\/a> officials prompted markets to slash the probability of a 25 basis point (bp)<\/a> rate cut from the Fed in December from around 68% to just 40%, eroding gold\u2019s appeal as a zero-yield asset.<\/p>\n Influential Fed governor Christopher Waller pushed back overnight against recent hawkish Fed speak, warning of labour market \u2018stall speed\u2019 risks<\/a> and endorsing a December easing from the Fed as prudent risk management<\/a>. Yet his dovish<\/a> comments have so far failed to halt the decline.<\/p>\n Finally, the reopening of the US government following October\u2019s longest-ever shutdown has also removed a key tailwind that propelled gold to all-time highs in early October.<\/p>\n Gold remains strong despite near-term pain<\/p>\n Despite the near-term pain, gold is still up a remarkable 53.72% year-to-date, on track for its strongest annual performance since 1979. Relentless central bank buying and robust investor demand for protection against soaring fiscal deficits and persistent geopolitical uncertainty continue to provide a powerful macro backdrop to any corrective pullbacks<\/a>.<\/p>\n Gold technical analysis<\/p>\n Gold\u2019s decline from its record $4381 high of 21 October is viewed as a correction, not a reversal<\/a> lower.<\/p>\n At this point, it appears that gold has completed the first two legs of a correction (waves A and B) but is missing another leg lower (wave C), which should take it below the 28 October $3886 low to complete the correction.<\/p>\n