Market update: gold prices, Nasdaq 100 rejected at resistance, USD/JPY flies ahead of Powell

US Treasury yields rebounded as San Francisco Fed President Mary Daly cautioned against premature victory over inflation. The resulting rally strengthened the US dollar, impacting tech stocks and non-yielding assets. The Nasdaq 100 slid for a second day, while gold prices stalled at resistance. Conversely, USD/JPY surged, rebounding from its 100-day simple moving average. Volatility could increase in the coming days as Fed chair Jerome Powell is set to engage in a fireside chat at Spelman College in Atlanta, Georgia, on Friday. It is crucial for traders to focus on his remarks, given the recent mixed signals and inconsistent messaging from the central bankfireside chat, expect heightened volatility.

Possibles Fed scenarios:

• Hawkish rhetoric

Hawkish comments by Powell favoring higher interest rates for longer are likely to exert upward pressure on US yields, fostering conditions for the continuation of the US dollar's recent recovery. This, in turn, might negatively impact both gold prices and the Nasdaq 100.

• Dovish outcome

Lack of strong pushback against the dovish monetary policy outlook reflected in market pricing could convince traders the Fed is about to capitulate, weighing on yields and the greenback. While this scenario could create a virtuous cycle for bullion and tech stocks, it could send USD/JYP sharply lower.

Bottom line

To prevent further easing of financial conditions, which could complicate efforts to restore price stability sustainably, Powell could come out swinging, pledging to stay the course and to maintain a restrictive stance for an extended period. This position could disrupt the bullish momentum seen in the equity market and precious metals complex over the past few weeks.

Gold prices technical analysis

Gold rallied sharply in recent weeks, briefly reaching its best levels since May. Prices, however, have been unable to push past the $2,050 threshold, with sellers defending this barrier tooth and nail for now. It is too early to know for sure if this technical ceiling will hold, but if it ultimately does, it won’t be long before we see a drop towards $2,010. XAU/USD might find stability upon testing this area, but a breach could prompt a bearish move toward $1,985 and $1,960 if the weakness persists.

Conversely, if upward momentum resurfaces with fury and pushes prices decisively above $2,050, gold could be headed towards its all-time high above $2,070 in short order, the next major resistance to watch closely.

Gold price technical chart

Nasdaq 100 technical analysis

The Nasdaq 100 soared in November, rising more than 10% and posting its largest monthly gain since July 2022, when it advanced 12.5%. Despite the strong upward momentum, the tech index has started to stall out this week, with prices struggling to clear technical resistance near 16,100.While it would not be unusual to see a healthy pullback after such a strong performance, especially if markets have become overly exuberant of late, a break above 16,100 could unleash animal spirits on Wall Street, invigorating bullish momentum and propelling prices towards their all-time highs set in 2021.

On the other hand, if sentiment starts to deteriorate and the bulls head for the hills to wait for better entry points, we could see a drop towards at 15,700, followed by 15,500. Although the tech index could encounter support in this region during a decline, a move below it could send prices towards 15,300.

Nasdaq 100 technical chart

USD/JPY technical analysis

USD/JPY has been down on its luck in recent weeks, dragged down by broad-based US dollar weakness. However, the pair managed to stabilize over the past couple of days near its 100-day simple moving average, which has led to a moderate recovery. If gains pick up momentum in the coming sessions, resistance appears at 149.70. Surpassing this obstacle might prove daunting for the bullish camp, but doing so could trigger a rally towards 150.90, followed by 152.00.

On the flip side, if the nascent rebound ends abruptly and gives way to a bearish reversal, primary support is found at 147.25. Preserving this technical floor is essential as a breakdown might set off a decline towards channel support at 146.00. On further losses, the focus shifts to 144.50.

USD/JPY technical chart

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