Gold prices are fluctuating at high levels, with increasing pressure to take profits. The dollar is rebounding and geopolitical risks coexist. The upcoming CPI data will ignite the market!
2025-12-18 13:33:46
On Wednesday (December 18) during the Asian session, spot gold traded in a narrow range near its two-month high, currently hovering around $4325-$4343, with the overall trading range significantly narrowing. On one hand, some long positions were taking profits at higher levels, while the US dollar index rebounded somewhat, putting pressure on gold. On the other hand, gold's traditional safe-haven asset properties remain strong, and the overall downside potential is expected to be relatively limited.
Despite facing short-term adjustments, gold's potential downside risks remain constrained by multiple factors. Recent US employment data, while showing limited non-farm payroll growth and a slight increase in the unemployment rate, has reinforced market expectations for further interest rate cuts by the Federal Reserve, which has somewhat weighed on the dollar. A lower interest rate environment significantly reduces the opportunity cost of holding non-interest-bearing assets like gold, thus providing solid support for gold and driving inflows of safe-haven funds.
Opinions within the Federal Reserve are divided. Fed Governor Christopher Waller supports a gradual rate cut to return to the neutral interest rate level, but warns against hasty action given that inflation remains high. Atlanta Fed President Rafael Bostic is more cautious, stating he does not support near-term rate cuts and believes there is limited room for rate cuts next year unless inflation falls significantly.
Furthermore, recent geopolitical developments have further enhanced gold's appeal. The Venezuelan government ordered its navy to escort ships carrying oil products in response to US President Trump's "total blockade" of the country's oil industry. This move directly escalates the risk of confrontation between the US and Venezuela and could trigger wider regional instability. As a recognized traditional safe-haven asset, gold often attracts significant capital inflows in such escalating tensions, thus limiting further price declines.
Traders are closely watching the upcoming US November Consumer Price Index (CPI) inflation report, due on Thursday. This data is considered a key indicator influencing the Federal Reserve's future monetary policy direction. Market expectations suggest that the November headline CPI may rise by approximately 3.0% year-on-year, while the core CPI is expected to remain around 3.0%. Simultaneously, the weekly initial jobless claims data will also be released that day, providing investors with the latest clues about the health of the US economy.
If the CPI data is moderate, it could further solidify expectations of interest rate cuts and push gold prices higher; conversely, if inflationary pressures exceed expectations, it could strengthen the dollar and temporarily suppress gold prices. Regardless of the outcome, this report will trigger significant market volatility and serve as a leading indicator for short-term gold price movements.
From a technical analysis perspective, although gold showed a negative trend on the day, it maintained an overall positive long-term bias. On the four-hour chart, the gold price held firmly above the key 100-day exponential moving average, showing a strong constructive structure. Meanwhile, the 14-day Relative Strength Index (RSI) was above the midline, indicating that upward momentum still dominates, and further upside potential is expected.
If the market shows a sustained bullish trend and accumulates above the upper Bollinger Band on the 4-hour chart at $4356, gold could potentially retest the all-time high of $4381 and challenge the psychological level of $4400. Conversely, if the price continues to decline and breaks below the recent low near $4300, it could attract more selling pressure, targeting lower support levels such as $4271 or the 100-day moving average at $4233.
In addition, the Bollinger Bands on the daily chart are widening and sloping upwards, suggesting that the market outlook is slightly bullish.
Overall, the gold market is currently in a sensitive phase with intertwined bullish and bearish factors. Profit-taking and a rebounding dollar are putting short-term pressure on gold, but expectations of a Fed rate cut, escalating geopolitical tensions, and upcoming CPI data provide strong potential support. Investors need to closely monitor macroeconomic developments and technical signals to seize opportunities amidst volatility. Gold's status as a safe-haven asset remains highly attractive in a global environment of heightened uncertainty.
At 13:32 Beijing time, spot gold was trading at $4335.88 per ounce.
Strong supporting factors: Federal Reserve policy expectations and geopolitical tensions
Despite facing short-term adjustments, gold's potential downside risks remain constrained by multiple factors. Recent US employment data, while showing limited non-farm payroll growth and a slight increase in the unemployment rate, has reinforced market expectations for further interest rate cuts by the Federal Reserve, which has somewhat weighed on the dollar. A lower interest rate environment significantly reduces the opportunity cost of holding non-interest-bearing assets like gold, thus providing solid support for gold and driving inflows of safe-haven funds.
Opinions within the Federal Reserve are divided. Fed Governor Christopher Waller supports a gradual rate cut to return to the neutral interest rate level, but warns against hasty action given that inflation remains high. Atlanta Fed President Rafael Bostic is more cautious, stating he does not support near-term rate cuts and believes there is limited room for rate cuts next year unless inflation falls significantly.
Furthermore, recent geopolitical developments have further enhanced gold's appeal. The Venezuelan government ordered its navy to escort ships carrying oil products in response to US President Trump's "total blockade" of the country's oil industry. This move directly escalates the risk of confrontation between the US and Venezuela and could trigger wider regional instability. As a recognized traditional safe-haven asset, gold often attracts significant capital inflows in such escalating tensions, thus limiting further price declines.
Market Focus: US November CPI Inflation Data to be Released Soon
Traders are closely watching the upcoming US November Consumer Price Index (CPI) inflation report, due on Thursday. This data is considered a key indicator influencing the Federal Reserve's future monetary policy direction. Market expectations suggest that the November headline CPI may rise by approximately 3.0% year-on-year, while the core CPI is expected to remain around 3.0%. Simultaneously, the weekly initial jobless claims data will also be released that day, providing investors with the latest clues about the health of the US economy.
If the CPI data is moderate, it could further solidify expectations of interest rate cuts and push gold prices higher; conversely, if inflationary pressures exceed expectations, it could strengthen the dollar and temporarily suppress gold prices. Regardless of the outcome, this report will trigger significant market volatility and serve as a leading indicator for short-term gold price movements.
Technical Outlook: Long-term bullish trend remains unchanged.
From a technical analysis perspective, although gold showed a negative trend on the day, it maintained an overall positive long-term bias. On the four-hour chart, the gold price held firmly above the key 100-day exponential moving average, showing a strong constructive structure. Meanwhile, the 14-day Relative Strength Index (RSI) was above the midline, indicating that upward momentum still dominates, and further upside potential is expected.
If the market shows a sustained bullish trend and accumulates above the upper Bollinger Band on the 4-hour chart at $4356, gold could potentially retest the all-time high of $4381 and challenge the psychological level of $4400. Conversely, if the price continues to decline and breaks below the recent low near $4300, it could attract more selling pressure, targeting lower support levels such as $4271 or the 100-day moving average at $4233.
In addition, the Bollinger Bands on the daily chart are widening and sloping upwards, suggesting that the market outlook is slightly bullish.
Summary: Gold market is mixed, with both opportunities and risks present.
Overall, the gold market is currently in a sensitive phase with intertwined bullish and bearish factors. Profit-taking and a rebounding dollar are putting short-term pressure on gold, but expectations of a Fed rate cut, escalating geopolitical tensions, and upcoming CPI data provide strong potential support. Investors need to closely monitor macroeconomic developments and technical signals to seize opportunities amidst volatility. Gold's status as a safe-haven asset remains highly attractive in a global environment of heightened uncertainty.
At 13:32 Beijing time, spot gold was trading at $4335.88 per ounce.
- 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.
