On Friday morning (December 6th) in the Asian market, spot gold fluctuated narrowly and is currently trading around $2633.65 per ounce. Gold prices fell 0.68% on Thursday, hitting a intraday low of $2623.46 per ounce, close to the near week low of $2620.83 set last Thursday, as market expectations for the Federal Reserve's December rate cut slightly cooled after the release of a series of initial jobless claims data in the United States last week. However, the decline in gold prices is limited by two factors: firstly, it is supported by the geopolitical situation, and secondly, the market is still waiting for US non farm payroll data to understand the Federal Reserve's stance on interest rate cuts.

David Meger, head of metal trading at High Ridge Futures, said, "We are currently in a stagnant period, with only range volatility, and we are looking for the next data or stimulus to push gold out of this range

The moderate increase in the number of Americans applying for unemployment benefits last week indicates that the labor market continues to cool steadily.

The US Department of Labor announced on Thursday that the number of first-time applicants for state unemployment benefits increased by 9000 in the week ending November 30, to 224000 seasonally adjusted. Economists previously predicted that the number of applicants in the past week would be 215000.

Jason Ware, Chief Investment Officer and Chief Economist of Albion Financial Group, said, "The number of people applying for unemployment benefits is not a big deal; even though the number of applicants has increased by 9000 in the past week, the number of people applying for unemployment benefits is still at a very low level

The application report for unemployment benefits shows that as of the week of November 23, the number of people who have renewed their applications for unemployment benefits reflecting the recruitment situation decreased by 25000, and after seasonal adjustment, it was 1.871 million.

Another report from the Bureau of Economic Analysis of the US Department of Commerce shows that the trade deficit shrank 11.9% to $73.8 billion in October, with the largest decline in imports since the end of 2022, which may contribute to economic growth in this quarter.

Economists have predicted that the trade deficit will narrow to $75 billion. Imports decreased by 4.0%, the largest decline since November 2022, to 339.6 billion US dollars. Imports of goods decreased by 5.5% to $269.3 billion.

The market is currently shifting its focus towards data that can more clearly reflect the employment market situation, namely the expected non farm payroll data to be released on Friday morning. Before the Federal Reserve's meeting on December 17-18, the inflation index will be released next week.

A survey shows that non farm employment may increase by 200000 in November, while October only saw an increase of 12000, the lowest since December 2020. The unemployment rate is expected to rise from 4.1% in October to 4.2%.

The "Beige Book" report released by the Federal Reserve on Wednesday stated that employment in various regions remained "flat or only slightly increased" in November. The report also pointed out that "recruitment activities have been suppressed, worker turnover rates remain low, and few companies have reported an increase in employee numbers," and added that "according to reports, the level of layoffs is also low

Mike Lorizio, a senior fixed income trader at Manulife Investment Management, said, "There are too many economic data from now until the conference, Friday's non farm payroll data, next week's CPI and PPI, and the market will see these data as key to (the Fed's) decisions," Albion's Ware believes that labor market data is now more important to the Fed's decisions than inflation data.

Federal Reserve Chairman Powell seemed to send a signal on Wednesday supporting a future slowdown in interest rate cuts, stating that the current economy is stronger than the central bank's expectations for September. San Francisco Fed President Daley added that there is no sense of urgency to further reduce borrowing costs.

So, the market reduced the possibility of a 25 basis point interest rate cut at this month's meeting on Thursday. CME's FedWatch tool showed on Thursday that the probability of a December rate cut is 70%, lower than the 75% seen later on Wednesday.

However, the rebound of US 10-year treasury bond bond yield on Thursday was blocked. It once rose 1% in the session, but gave up its gains in the late afternoon and closed at around 4.178%. The US dollar index fell 0.6% on Thursday, closing at 105.72, not far from the nearly three week low set last Friday. This may limit the downward space of gold prices in the short term.

In terms of geopolitical situation, the possibility of Israel and Hamas reaching a ceasefire agreement has weakened the safe haven demand for gold.

On Thursday, according to the Jerusalem Post, two Israeli officials stated that Israel has submitted a latest version of a ceasefire proposal to Hamas through Egypt, involving the release of the remaining 100 hostages.

Israel's Channel 12 television reported that on Thursday local time, Egypt put forward a new proposal to promote a ceasefire in the Gaza Strip, which includes: a 45 to 60 day ceasefire between the two sides in the Gaza Strip; Gradually release detained individuals and armed members of the Palestinian Islamic Resistance Movement (Hamas); Increase the total number of trucks providing humanitarian aid to the Gaza Strip to approximately 350 per day; Open the Rafa border crossing with Egypt and transfer its management to the Palestinian National Authority.

We are waiting for the Egyptians to notify us of Hamas' response, "an Israeli official said when discussing Hamas' position on the latest proposal. In a few days, we will know if Hamas is willing to negotiate within the framework we have proposed, "he added.

If Hamas responds positively, the Israeli delegation will go to Cairo to finalize details such as the ceasefire deadline, the number of hostages to be released, and which Palestinian prisoners will be released.

However, on Thursday local time, Lebanese Hezbollah leader Naeem Kassem delivered a video speech. He stated that Israel has violated the ceasefire agreement more than 60 times, and Lebanon has a responsibility to take follow-up actions.

In addition, concerns about the situation in Syria have escalated.

The Syrian government army said they are withdrawing from the central city of Hama, marking the second major victory for the anti-government armed coalition. Last week, the Syrian anti-government armed coalition occupied Aleppo, the second largest city.

In a statement released by the official media SANA, the Syrian military said, "In the past few hours, as the confrontation between our soldiers and terrorist organizations has intensified, and the number of martyrs killed in our ranks has increased, these organizations have infiltrated several parts of this city and entered the city.

The attack by Syrian rebels is a major setback for President Assad and his supporters in Iran and Russia, reigniting the long dormant civil war.

Hama is located at a critical crossroads in central western Syria, with strategic significance, providing a direct supply line between the capital Damascus and Aleppo. Once Hama falls, the last line of defense in front of the Syrian capital Damascus will be Homs.

In addition, the Russia-Ukraine conflict is still ongoing, but we also need to pay attention to the progress of mediation of the Russia-Ukraine conflict after Trump's victory.

On the 5th local time, the Russian Ministry of Defense reported that in the past day, the Russian military has repelled multiple Ukrainian attacks and launched multiple offensives in Kharkiv, Afjievka, Donetsk, Zaporizhzhia, Kherson and other directions.

On this trading day, in addition to the US non farm payroll report and geopolitical news, there will also be speeches from multiple Federal Reserve officials, which investors need to pay attention to.

From a technical perspective, at the daily level, the gold price is still in a volatile trend. We are paying preliminary attention to the breakthrough situation in the 2620-2657 region and the 2605-2666 region; 2620 is the support for the lowest point in the past week, and 2605 is the support for the lowest point in the past three weeks set on November 26th. 2657 represents the resistance of the high point in the past week, while 2666 represents the resistance of the high point in the past two weeks and the 55 day moving average.

Daily chart of spot gold