Gold vs USD trend diverges! Asian market short-term pullback exceeds $36, technical indicators reveal next move

Monday Asian market reports gold volatility news—after hitting a six-week high, spot gold suddenly came under pressure. Currently, it hovers around $4,220 per ounce, having retraced more than $36 from the intraday high of $4,256.31 per ounce. Is this rapid correction driven by technical profit-taking, or is the market re-evaluating the Fed’s rate cut expectations?

Technical Outlook: Key Levels Determine Future Direction

According to FXStreet’s technical analysis, gold remains in a strong upward trend. On the daily chart, the 21-day, 50-day, 100-day, and 200-day moving averages are all rising, with prices firmly above these momentum indicators. Short-term support is at $4,095.07 per ounce. The RSI(RSI) stands at 65.97, indicating that upward momentum is still sufficient and the market has not entered overbought territory.

However, there is a barrier ahead—between the high of $4,381.7 and the low of $3,885.84, the 78.6% retracement level sits precisely at $4,275.16 per ounce. If gold can effectively stay above this level, the upward trend may continue; otherwise, it faces greater correction pressure.

More critically, the 61.8% retracement level at $4,191.95 per ounce is a key line—holding this suggests the recent decline is only a temporary pause; failing to hold could signal deeper retracement risks. The 50-day moving average at $4,040.77 per ounce acts as the last bastion of the trend.

Fundamental Outlook: The Battle Between Fed Rate Cut Expectations Supporting Gold vs. US Dollar

On Monday morning, gold briefly surged to $4,250 per ounce, hitting a six-week high. The rally was fueled by market expectations of further easing by the Fed—according to CME’s FedWatch Tool, the probability of a 25 basis point rate cut in December is as high as 87%. The relative strength of gold against the dollar is supported by these rate cut expectations.

But the real test is coming. At 23:00 Beijing time on Monday, the US November ISM Manufacturing PMI will be released. The consensus forecast is a slight decline from October’s 48.7 to 48.6, indicating manufacturing contraction signals are becoming more evident. If manufacturing remains weak, it will likely reinforce the Fed’s December rate cut plan, weakening the dollar and providing a new upward catalyst for gold against the dollar.

A series of key data releases are also upcoming this week—ADP employment change, ISM Services PMI, unemployment claims, and core PCE price index—these will provide new guidance for the gold vs. dollar outlook ahead of next week’s Fed meeting.

Market Outlook: Bulls in Control, but Watch for Technical Corrections

As long as gold stays above the 50-day moving average support, the bullish bias against the dollar remains intact. Analysts believe that if the price can break above the 78.6% retracement level, bulls may attempt to challenge recent highs; however, a decline below the 61.8% retracement level would increase risks. The key focus is whether upcoming economic data continue to confirm recession signals, which will directly influence the Fed’s policy stance and, consequently, the relative strength of the dollar and gold.