The US Dollar has recently been on a downward trend, largely fueled by increasing speculation about potential rate cuts in 2024.
However, Federal Reserve Chair Jerome Powell's remarks on Friday hinted that it might be premature to anticipate a shift towards lower rates.
Nonetheless, other Federal Reserve members have noted that rate cuts could be a possibility if inflation continues its downward trajectory in the coming months. Consequently, upcoming economic data will play a critical role in shaping monetary policy.
This week is particularly significant with the release of the US Non-Farm Payrolls (NFP) report, where expectations are set for a rise to 175,000 jobs in November, up from 150,000 in October, and an unemployment rate holding steady at 3.9%.
In a related development, gold prices surged at the start of the week, reaching new highs. This spike is attributed to escalating geopolitical tensions in the Middle East and a widespread bullish sentiment in the gold market, which might be overextended.
Such a consensus view on the attractiveness of gold, spurred by geopolitical factors and the anticipation of rate cuts in 2024, could be overly optimistic.
This situation bears a resemblance to the silver market in 2021, where a similar 'over-crowded' bullish stance ultimately led to a market reversal. There's a possibility that gold might experience a similar pattern, particularly given the recent drop from its all-time high back to the 2k area.
Trade well,
Grega
https://twitter.com/GregaHorvatFX
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