Gold seeks direction amid fluctuations, and the bullish defense line remains solid

Hong Kong’s gold price today, along with the international gold trend, experienced a technical correction on Thursday. Falling below the recent two-week high of $4,171-4,173, the gold price faces profit-taking pressure, but the downside space is firmly protected by market structure.

The Contrast Between Support and Resistance

On the technical side, the constructive layout of gold remains clear. Any further decline is expected to find initial support in the $4,132-4,130 region. If this level is broken, $4,100 will become the next line of defense. Further down, an important support zone converges around $4,040, including the 200-period exponential moving average on the 4-hour chart and the upward trendline extending from late October. Only a confirmed break below the latter could shift short-term trading sentiment to bearish, pushing the gold price toward the psychological level of $4,000.

Conversely, upward resistance needs to be broken at $4,173 to confirm. A breakout would target the $4,200 integer level, with further momentum testing the monthly high around $4,245.

Three Major Factors Driving Selling Pressure

The correction in gold is not due to deteriorating fundamentals but results from the simultaneous influence of three forces:

First, a shift in risk sentiment. Market expectations for peace agreements between Russia and Ukraine have increased, coupled with expectations of rate cuts in the US, fueling overall optimism in equities. In this context, the non-yielding gold is naturally sold off, with some funds flowing into risk assets. US President Trump stated that an agreement between Ukraine and Russia is very close, further boosting positive market expectations.

Second, mixed economic data signals. The US Census Bureau reported this week that new orders for durable goods in September increased by only 0.5% month-on-month, below last month’s upward revision of 3.0%. The Chicago PMI also disappointed, falling further to 36.3 in November, deep into contraction territory. However, unemployment benefit claims unexpectedly improved, with new claims dropping to 216K for the week ending November 22, a seven-month low. This inconsistency in data has not yet shaken the market’s belief in further Fed rate cuts.

Third, dovish stances from Fed officials. New York Fed President John Williams said rates could decline in the short term without jeopardizing inflation targets; Fed Governor Christopher Waller believes the labor market weakness is enough to support a 25 basis point cut in December; Governor Stephen Mian reiterated that the economy needs significant rate cuts to return to neutrality. This consistent dovish tone continues to weigh down the dollar index, which briefly fell to a one-week low during Thursday’s Asian session, directly supporting non-yielding gold.

Why Limited Downside Space

On the surface, gold faces selling pressure amid optimistic sentiment. But deeper logical support underpins its defensive capacity. First, the market consensus has already priced in a 25 basis point rate cut by the Fed in December, providing a fundamental support for gold; second, even if progress is made in Russia-Ukraine peace talks, geopolitical risks have not dissipated—safe-haven demand is only temporarily retreating, not disappearing; finally, multiple technical support levels ($4,130, $4,100, $4,040) form a staggered defense line, and a significant decline would attract a new round of buying.

Therefore, any meaningful corrective decline could still be viewed as a buying opportunity, and today’s Hong Kong gold price will continue to follow this logic. Although gold bulls are becoming more cautious amid risk appetite, they have not lost their defensive resolve.