Spot gold traded near its highest level in nearly a month and a half during Asian trading on Friday (December 12), currently hovering around $4,279 per ounce. Gold prices have risen for three consecutive trading days, reaching $4,285.75 per ounce on Wednesday, the highest level since October 21. The generally strong performance of global stock markets, reflecting a risk-averse sentiment, has weakened demand for the traditional safe-haven precious metal.
Although a modest rebound in the dollar from a two-month low hit on Thursday temporarily halted gold's gains, the dollar's lack of momentum for a significant appreciation remains underpinned by persistent dovish expectations from the Federal Reserve, which will continue to support non-yielding gold. Meanwhile, persistent geopolitical uncertainties, such as the stalemate in the Russia-Ukraine peace talks, limit the downside potential for gold prices.

Gold has risen nearly 2% so far this week, and investors will now focus on speeches by several influential FOMC members in search of short-term trading opportunities before the weekend.

Daily Market Highlights: Weakening safe-haven demand weighs on gold; dovish Fed stance benefits bulls.

The Federal Reserve's dovish outlook dragged the dollar to a two-month low on Thursday and pushed non-yielding gold to its highest level since October 21. On Wednesday, the Fed cut interest rates by 25 basis points as expected and projected only one more rate cut in 2026. Fed Chairman Powell stated at the post-meeting press conference that there are significant downside risks to the US labor market and the central bank does not want policy to stifle job growth. This fueled speculation about two more rate cuts next year, further benefiting XAU/USD bulls.

Meanwhile, Asian stocks extended their overnight Wall Street gains in early trading on Friday, weakening demand for traditional safe-haven gold and making gold bulls hesitant. However, the outlook for lower US interest rates coupled with continued geopolitical uncertainty may continue to provide support for gold. US President Trump is extremely disappointed with both Russia and Ukraine and no longer wants to hear about any negotiations, a White House spokesperson said on Thursday. This comes after Ukrainian President Zelensky stated that the US is urging Ukraine to cede territory in exchange for an end to nearly four years of war.

With no major US economic data releases scheduled for Friday, the dollar's performance will depend on speeches from key FOMC members. Furthermore, overall risk sentiment will also provide some momentum for gold, which has seen substantial gains this week.

Gold is poised for further gains, and the overnight breakout of the two-week range remains valid.

The strong overnight rally confirmed a bullish signal breaking out of the nearly two-week trading range, with the top of that range around $4245-$4250. Momentum indicators on the daily chart remain firmly in positive territory and far from overbought territory, suggesting that the path of least resistance for gold is still upward. Therefore, any pullback towards the aforementioned resistance level (now turned support) could be seen as a buying opportunity, with the $4240-$4218 area likely to limit downside, followed by support at the psychological level of $4200 and the $4170-$4165 area. Only a clear break below the latter support could allow the bears to gain the upper hand and pave the way for a deeper decline.

On the upside, the $4,300 level has now become immediate resistance; a break above this level could lead to a challenge of the $4,328-$4,330 resistance zone. Further buying pressure would push gold towards the all-time high of $4,384 reached in October. A break above $4,400 would be a new bullish signal, providing a stage for the continuation of the uptrend established since the October lows.


(Spot gold 4-hour chart, source: FX678)

At 14:08 Beijing time, spot gold was trading at $4278.87 per ounce.