XAU trades lower for the fourth consecutive session. US recession unlikely

U.S. Dollar Trading (USD) extended its previous session gains against the Euro on Friday as Fed chairman Bernanke indicated that the central bank may look to further reduce borrowing costs in order to bolster growth, in which the currency was supported as concerns regarding a recession were reduced.  A government report today showed the Fed's preferred inflation gauge held below the 2% “comfort-zone” during October, as core PCE was released at 1.9% for the y/y. In U.S. share markets the NASDAQ was down -7.17 points (-0.27%) whilst the Dow Jones 59.99 (+0.45%). Crude oil was lower by US$2.30 a barrel to US$88.71. Looking ahead, Manufacturing ISM for November is scheduled for release, whilst plenty of emphasis will be placed on speeches by U.S. officials.  

The Euro (EUR) eased versus the dollar as confidence grew surrounding the unlikelihood of the US economy heading into a recession. Overall the EURUSD traded with a low of 1.4630 and a high of 1.4786 before closing the day at 1.4635 in the New York session. Unemployment rate and PMI manufacturing in terms data is scheduled for release whilst ECB president Trichet is also scheduled to speak.

The Japanese Yen (JPY) fell across the board succumbing to a substantial amount of pressure against the high yielder’s as global stocks rallied. Overall the USDJPY traded with a low of 109.67 and a high of 111.22 before closing the day at 111.18 in the New York session.

The Sterling (GBP) fell versus the Dollar and Euro as investors took a more bearish stance on the currency after a week that has seen negative data increasing expectations that the Bank of England may cut interest rates. Overall the GBPUSD traded with a low of 2.0535 and a high of 2.0700 before closing the day at 2.0567 in the New York session. Data out of the UK on Monday includes house prices and PMI Manufacturing. 

The Australian Dollar (AUD) found initial support as investors returned to high yielding carry trades, yet was unable to sustain much of its gains. Overall the AUDUSD traded with a low of 0.8808 and a high of 0.8992 before ending the session at 0.8820 in New York. Trade Balance data out of the for the month of October was released below expectations at -2983 mln (Forecast: -1855 mln) 

Gold (XAU) fell for the fourth straight day after a decline in energy costs and a strengthening dollar reduced demand for the precious metals as hedges against inflation. XAU traded with a low of 779.40 and a high of 799.00
 
TECHNICAL COMMENTARY

Euro – 1.4655
Initial support at 1.4617 (Nov 19 low) followed by 1.4602 (61.8% retracement of the 1.4010 to 1.4968 advance). Initial resistance is now located at 1.4859 (Nov 28 high) followed by 1.4908 (Nov 27 high).
 
Yen – 110.57
Initial support is located at 109.48 (Nov 28 low) followed by 108.27 (Nov 26 low). Initial resistance is now at 111.33 (38.2% retracement of the 117.95 to 107.23 decline) followed by 111.14 (Nov 14 high)
 
Pound – 2.0560
Initial support at 2.0534 (Nov 30 low) followed by 2.0519 (Nov 23 low). Initial resistance is now at 2.0833 (Nov 28 high) followed by 2.0846 (Nov 14 high)
 
Australian Dollar – 0.8795
Initial support a 0.8776 (Nov 29 low) followed by 0.8720 (Nov 28 low). Initial resistance is now at 0.8921 (Nov 28 high) followed by 0.8939 (38.2% retracement of the 0.9400 to 0.8654 decline)
 
Gold – 787.80
Initial support at 778.90 (Nov 30 low) followed by 773.0 (Nov 20 low). Initial resistance is now at 808.05 (Nov 29 high) followed by 815.70 (November 27 high)