Gold prices surged and then retreated, resulting in increased volatility. A slight reduction in net long positions by non-commercial investors signaled caution.
2025-12-03 20:35:19
On Wednesday, December 3, spot gold prices were trading around $4,200 per ounce in pre-market trading in the US. Traders were cautious, mainly due to the upcoming release of several key US economic data, including private sector employment changes and the services purchasing managers' index. These indicators will provide important reference for the Federal Reserve's monetary policy meeting next week.
Against the backdrop of macroeconomic policy expectations dominating market pricing logic, the continued weakness of the US dollar and the unresolved geopolitical tensions have become important factors supporting precious metal prices. At the same time, strong global central bank demand for gold has further enhanced gold's attractiveness as a strategic reserve asset.
Despite relatively stable overall US economic data, market expectations for the Federal Reserve's future policy stance have clearly shifted towards easing. Newly released survey data shows that the market widely expects the Fed to begin a rate-cutting cycle early next year, with current pricing indicating an approximately 87% probability of a 25 basis point rate cut at its first meeting. This expectation has put continued pressure on the US dollar index, which has fallen by more than 100 points since the end of October, currently hovering around 98.95, its lowest level in nearly a month. The weakening dollar has directly increased the attractiveness of dollar-denominated commodities, particularly providing significant support for non-interest-bearing assets such as gold.
Furthermore, recent statements from several Federal Reserve officials have leaned towards a dovish stance. While not explicitly promising rate cuts, their acknowledgment of the declining inflation trend and their focus on the marginal slowdown in the labor market have been interpreted by the market as signals of a more flexible policy position. Against this backdrop, real yields on US Treasury bonds have remained low and volatile, with the implied yield on 10-year Treasury Inflation-Protected Securities fluctuating near zero, significantly reducing the opportunity cost of holding gold.
Geopolitical risks remain a significant external variable. Recently, a US special envoy traveled to Moscow for consultations on the situation in Ukraine. While both sides described the talks as "constructive and informative," no substantial consensus was reached on the core territorial disputes. Russian advisors clearly stated that key differences remain and that further negotiations will continue. This diplomatic contact failed to deliver a clear signal of easing tensions. Against the backdrop of a restructuring of the global security architecture, the intertwining of traditional and non-traditional security threats is prompting governments worldwide to strengthen their strategic resource reserves.
It is worth noting that the latest report from the World Gold Council shows that global central banks made net purchases of 53 tons of gold in October, a record high for a single month this year, representing a 36% increase from the previous month. This not only reflects the urgent need for emerging market countries to diversify their foreign exchange reserves, but also demonstrates the prudent attitude of sovereign institutions towards the stability of the current international financial system. The continued increase in gold holdings by central banks provides rigid support on both the supply and demand sides and has a positive impact on market confidence on a psychological level. This type of structural demand is not dependent on short-term price fluctuations and has strong sustainability, making it one of the most important new variables in the gold market in recent years.
After a rapid rise in the early stages, spot gold has entered a consolidation phase at high levels. Looking at the charts, gold prices touched a high of $4228 during the day before retreating somewhat, and are currently fluctuating around the psychological level of $4200.
In terms of market positioning, the net non-commercial long position in COMEX gold futures decreased slightly from last week, but it is still at a historically high level, reflecting that speculative funds have not withdrawn on a large scale, but rather are more of a phase of profit-taking.
Looking at the candlestick pattern in the chart, after a recent surge, gold prices reached a high of $4264.43 and have since retreated somewhat. Currently, the price is around $4200, near a key support level.
In summary, gold prices found some support around $4,200. If this level can be held, it may test the previous high of $4,264.43. If it fails to hold this level, it may retrace to the lower support level around $4,120.
The core driving logic for gold prices will remain focused on the resonance effect of monetary policy expectations and safe-haven demand. In the short term, the upcoming US non-farm payroll report will be the focus. Since the October data will be released together with the November data, the information window available to policymakers is narrowing. Therefore, the importance of this week's ADP employment change and ISM services PMI is further amplified. If the data is significantly weaker than expected, it may reinforce the market's judgment of a cooling labor market, thereby accelerating the realization of interest rate cut expectations, which is beneficial to gold; conversely, it may trigger a short-term pullback. In the medium term, the nomination process for the Federal Reserve Chair is also worth noting. Although the official announcement is still far off, the market has already begun to anticipate the policy style differences brought about by different candidates. Some analysts believe that if a potential candidate is perceived to favor a more dovish stance, it may further suppress the dollar and boost precious metals.
Furthermore, seasonal factors cannot be ignored. The end of the year is typically a peak season for physical gold consumption. Following India's Diwali festival, purchasing activity in the Middle East picks up, and the pre-Chinese New Year stockpiling cycle also begins, all of which support physical gold liquidity. However, it should be noted that current gold prices are already at historical highs, and there is a certain risk of overvaluation. If the macroeconomic narrative reverses, such as a resurgence of inflation or a sudden rebound in risk appetite, a technical correction is possible. Therefore, future price movements are likely to be characterized by wide-range fluctuations rather than a one-sided upward trend.
The current spot gold market is operating in a complex environment influenced by multiple forces. On one hand, a weak dollar, low real interest rates, and central bank gold purchases have jointly created solid support at the bottom. On the other hand, geopolitical stalemates and policy uncertainties continue to activate the market's risk-averse instincts. Although short-term price volatility has increased, the underlying fundamental support is more robust than before.
Against the backdrop of macroeconomic policy expectations dominating market pricing logic, the continued weakness of the US dollar and the unresolved geopolitical tensions have become important factors supporting precious metal prices. At the same time, strong global central bank demand for gold has further enhanced gold's attractiveness as a strategic reserve asset.
Despite relatively stable overall US economic data, market expectations for the Federal Reserve's future policy stance have clearly shifted towards easing. Newly released survey data shows that the market widely expects the Fed to begin a rate-cutting cycle early next year, with current pricing indicating an approximately 87% probability of a 25 basis point rate cut at its first meeting. This expectation has put continued pressure on the US dollar index, which has fallen by more than 100 points since the end of October, currently hovering around 98.95, its lowest level in nearly a month. The weakening dollar has directly increased the attractiveness of dollar-denominated commodities, particularly providing significant support for non-interest-bearing assets such as gold.
Furthermore, recent statements from several Federal Reserve officials have leaned towards a dovish stance. While not explicitly promising rate cuts, their acknowledgment of the declining inflation trend and their focus on the marginal slowdown in the labor market have been interpreted by the market as signals of a more flexible policy position. Against this backdrop, real yields on US Treasury bonds have remained low and volatile, with the implied yield on 10-year Treasury Inflation-Protected Securities fluctuating near zero, significantly reducing the opportunity cost of holding gold.
Geopolitical risks remain a significant external variable. Recently, a US special envoy traveled to Moscow for consultations on the situation in Ukraine. While both sides described the talks as "constructive and informative," no substantial consensus was reached on the core territorial disputes. Russian advisors clearly stated that key differences remain and that further negotiations will continue. This diplomatic contact failed to deliver a clear signal of easing tensions. Against the backdrop of a restructuring of the global security architecture, the intertwining of traditional and non-traditional security threats is prompting governments worldwide to strengthen their strategic resource reserves.
It is worth noting that the latest report from the World Gold Council shows that global central banks made net purchases of 53 tons of gold in October, a record high for a single month this year, representing a 36% increase from the previous month. This not only reflects the urgent need for emerging market countries to diversify their foreign exchange reserves, but also demonstrates the prudent attitude of sovereign institutions towards the stability of the current international financial system. The continued increase in gold holdings by central banks provides rigid support on both the supply and demand sides and has a positive impact on market confidence on a psychological level. This type of structural demand is not dependent on short-term price fluctuations and has strong sustainability, making it one of the most important new variables in the gold market in recent years.
Market performance
After a rapid rise in the early stages, spot gold has entered a consolidation phase at high levels. Looking at the charts, gold prices touched a high of $4228 during the day before retreating somewhat, and are currently fluctuating around the psychological level of $4200.
In terms of market positioning, the net non-commercial long position in COMEX gold futures decreased slightly from last week, but it is still at a historically high level, reflecting that speculative funds have not withdrawn on a large scale, but rather are more of a phase of profit-taking.
Looking at the candlestick pattern in the chart, after a recent surge, gold prices reached a high of $4264.43 and have since retreated somewhat. Currently, the price is around $4200, near a key support level.
In summary, gold prices found some support around $4,200. If this level can be held, it may test the previous high of $4,264.43. If it fails to hold this level, it may retrace to the lower support level around $4,120.
Looking ahead
The core driving logic for gold prices will remain focused on the resonance effect of monetary policy expectations and safe-haven demand. In the short term, the upcoming US non-farm payroll report will be the focus. Since the October data will be released together with the November data, the information window available to policymakers is narrowing. Therefore, the importance of this week's ADP employment change and ISM services PMI is further amplified. If the data is significantly weaker than expected, it may reinforce the market's judgment of a cooling labor market, thereby accelerating the realization of interest rate cut expectations, which is beneficial to gold; conversely, it may trigger a short-term pullback. In the medium term, the nomination process for the Federal Reserve Chair is also worth noting. Although the official announcement is still far off, the market has already begun to anticipate the policy style differences brought about by different candidates. Some analysts believe that if a potential candidate is perceived to favor a more dovish stance, it may further suppress the dollar and boost precious metals.
Furthermore, seasonal factors cannot be ignored. The end of the year is typically a peak season for physical gold consumption. Following India's Diwali festival, purchasing activity in the Middle East picks up, and the pre-Chinese New Year stockpiling cycle also begins, all of which support physical gold liquidity. However, it should be noted that current gold prices are already at historical highs, and there is a certain risk of overvaluation. If the macroeconomic narrative reverses, such as a resurgence of inflation or a sudden rebound in risk appetite, a technical correction is possible. Therefore, future price movements are likely to be characterized by wide-range fluctuations rather than a one-sided upward trend.
The current spot gold market is operating in a complex environment influenced by multiple forces. On one hand, a weak dollar, low real interest rates, and central bank gold purchases have jointly created solid support at the bottom. On the other hand, geopolitical stalemates and policy uncertainties continue to activate the market's risk-averse instincts. Although short-term price volatility has increased, the underlying fundamental support is more robust than before.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
