Did a surprisingly low CPI figure lead to an interest rate cut? The hesitant rise in gold prices reflects a battle between bulls and bears.
2025-12-18 21:51:40
On Thursday (December 18), during the Asian and European sessions, gold traded in a range throughout the day. The expectation of a slight easing of monetary policy by the Federal Reserve in 2026 and rising geopolitical risks provided mild support. At the same time, the unexpected decline in the US CPI and the fact that the dollar's rebound was hampered by data boosted gold. Although gold rebounded during the day and the bullish structure remained unchanged, there were signs that the trend was weakening.
The inflation data just released by the United States shows that the annualized CPI growth rate in November was 3.1%, while the actual growth rate was 2.7%. The core CPI growth rate was 3.0%, while the actual growth rate was 2.6%, both lower than expected. This has reduced market concerns about inflation risks and removed some obstacles to subsequent interest rate cuts.
Meanwhile, Federal Reserve Governor Waller signaled a dovish stance, saying that gradual easing could be initiated if inflation continues to slow; while Atlanta Fed President Bostic called for policy patience and opposed premature rate cuts.
This divergence in the Federal Reserve's stance makes CPI data a "game-changer" in determining policy direction—because inflation stickiness is weaker than expected, the market may increase its bets on interest rate cuts, thereby boosting gold and suppressing the dollar.
Meanwhile, as a non-interest-bearing asset, gold's upward momentum was hampered by the slight increase in real yields due to easing inflation. However, the decline in 10-year and 30-year US Treasury yields reduced borrowing costs and opportunity costs for gold, which was beneficial to gold. Weighing these multiple factors, gold prices rose.
US labor market data became key to solidifying expectations of interest rate cuts, providing core momentum for gold.
The delayed nonfarm payrolls report released Tuesday showed that the U.S. added 64,000 jobs in November, slightly exceeding market expectations of 50,000. However, the October figure was revised down to a decrease of 105,000 due to the government shutdown, and the cumulative downward revision for August and September was 33,000. More noteworthy is that the U.S. unemployment rate climbed to 4.6%, a new high since September 2021, coupled with slowing wage growth, fully confirming the continued cooling of the labor market.
This data echoes Federal Reserve Chairman Jerome Powell's earlier warning that "employment figures since April may have been overestimated by 60,000," significantly reinforcing market expectations for further easing of Fed policy. The market has already priced in two rounds of rate cuts next year.
The initial and continuing jobless claims figures released on Thursday are expected to increase by 225,000 and 1.93 million respectively, but slightly decrease to 224,000 and 1.897 million. However, the Philadelphia Fed Manufacturing Index for December fell sharply below expectations, both describing a situation of fewer businesses starting operations and fewer layoffs, similar to the previous data.
Meanwhile, since the unemployment rate is a key negative term in the equation for predicting the neutral interest rate, an increase in the unemployment rate expands the room for the neutral interest rate to move downward .
The resurgence of geopolitical risks has further provided safe-haven support for gold. Previous market optimism regarding the Russia-Ukraine peace talks has been dampened by new developments, with US President Trump ordering a complete blockade of sanctioned Venezuelan oil tankers entering and leaving ports.
As the United States escalates its military deployment in the region, the external pressure on the Nicolás Maduro government has increased sharply, and Brazil and Mexico have expressed their willingness to mediate.
Persistent geopolitical uncertainties coupled with tightening market liquidity at the end of the year have caused gold to regain its role as a portfolio stabilizer, with its asset performance leaping to the forefront of the market and becoming a core choice for safe-haven asset allocation.
The dollar's recent rebound is a major obstacle to gold's short-term upward movement. The US Dollar Index (DXY), which tracks the dollar against six major currencies, briefly fell below 98.00 on Tuesday (hitting its lowest level since October 3rd) before rebounding to around 98.50, limiting gold's upside potential to some extent. However, the dollar's rebound lacks sustained momentum, and policy disagreements within the Federal Reserve have further exacerbated market volatility.
Overall, gold is currently caught in a tug-of-war between "interest rate cut expectations + geopolitical support" and "dollar rebound + policy divergence," and the short-term consolidation trend is unlikely to change.
However, the continued betting on interest rate cuts may lead to the end of the rate cut window. Geopolitical crises have eased considerably compared to the beginning of the year, and there is indeed room for a dollar rebound. Meanwhile, easing inflation has increased the real yield in the market, so there is no reason to be overly optimistic about gold.
The dynamic evolution of the aforementioned core variables will jointly determine the subsequent trend of gold. Investors are advised to maintain flexible positions and adjust their trading strategies in a timely manner based on the outcome of key events.
From a technical perspective, spot gold against the US dollar (XAU/USD) still maintains a healthy bullish structure, but it is currently consolidating below the $4,350 resistance level. If it breaks below the 5-day moving average during the session, there will be signs of weakness, and if it closes below the 5-day moving average, the probability of weakness will increase.
The support level remains at the 5-day moving average and the upward trend line, followed by the important support level at 4236.
The resistance levels are at the middle and upper rails of the upward channel, as well as the new high of 4381. During the trading session, pay attention to the breakout at 4353.
(Spot gold daily chart, source: FX678)
At 21:49 Beijing time, spot gold was trading at $4,339 per ounce.
The inflation data just released by the United States shows that the annualized CPI growth rate in November was 3.1%, while the actual growth rate was 2.7%. The core CPI growth rate was 3.0%, while the actual growth rate was 2.6%, both lower than expected. This has reduced market concerns about inflation risks and removed some obstacles to subsequent interest rate cuts.
Meanwhile, Federal Reserve Governor Waller signaled a dovish stance, saying that gradual easing could be initiated if inflation continues to slow; while Atlanta Fed President Bostic called for policy patience and opposed premature rate cuts.
This divergence in the Federal Reserve's stance makes CPI data a "game-changer" in determining policy direction—because inflation stickiness is weaker than expected, the market may increase its bets on interest rate cuts, thereby boosting gold and suppressing the dollar.
Meanwhile, as a non-interest-bearing asset, gold's upward momentum was hampered by the slight increase in real yields due to easing inflation. However, the decline in 10-year and 30-year US Treasury yields reduced borrowing costs and opportunity costs for gold, which was beneficial to gold. Weighing these multiple factors, gold prices rose.
A cooling labor market underpins interest rate cuts and gold price support.
US labor market data became key to solidifying expectations of interest rate cuts, providing core momentum for gold.
The delayed nonfarm payrolls report released Tuesday showed that the U.S. added 64,000 jobs in November, slightly exceeding market expectations of 50,000. However, the October figure was revised down to a decrease of 105,000 due to the government shutdown, and the cumulative downward revision for August and September was 33,000. More noteworthy is that the U.S. unemployment rate climbed to 4.6%, a new high since September 2021, coupled with slowing wage growth, fully confirming the continued cooling of the labor market.
This data echoes Federal Reserve Chairman Jerome Powell's earlier warning that "employment figures since April may have been overestimated by 60,000," significantly reinforcing market expectations for further easing of Fed policy. The market has already priced in two rounds of rate cuts next year.
The initial and continuing jobless claims figures released on Thursday are expected to increase by 225,000 and 1.93 million respectively, but slightly decrease to 224,000 and 1.897 million. However, the Philadelphia Fed Manufacturing Index for December fell sharply below expectations, both describing a situation of fewer businesses starting operations and fewer layoffs, similar to the previous data.
Meanwhile, since the unemployment rate is a key negative term in the equation for predicting the neutral interest rate, an increase in the unemployment rate expands the room for the neutral interest rate to move downward .
Escalating geopolitical tensions and heightened demand for safe-haven assets enhance the value of gold as an investment.
The resurgence of geopolitical risks has further provided safe-haven support for gold. Previous market optimism regarding the Russia-Ukraine peace talks has been dampened by new developments, with US President Trump ordering a complete blockade of sanctioned Venezuelan oil tankers entering and leaving ports.
As the United States escalates its military deployment in the region, the external pressure on the Nicolás Maduro government has increased sharply, and Brazil and Mexico have expressed their willingness to mediate.
Persistent geopolitical uncertainties coupled with tightening market liquidity at the end of the year have caused gold to regain its role as a portfolio stabilizer, with its asset performance leaping to the forefront of the market and becoming a core choice for safe-haven asset allocation.
The dollar's recent rebound has exacerbated volatility due to increased policy divergence within the Federal Reserve.
The dollar's recent rebound is a major obstacle to gold's short-term upward movement. The US Dollar Index (DXY), which tracks the dollar against six major currencies, briefly fell below 98.00 on Tuesday (hitting its lowest level since October 3rd) before rebounding to around 98.50, limiting gold's upside potential to some extent. However, the dollar's rebound lacks sustained momentum, and policy disagreements within the Federal Reserve have further exacerbated market volatility.
Summary and Technical Analysis:
Overall, gold is currently caught in a tug-of-war between "interest rate cut expectations + geopolitical support" and "dollar rebound + policy divergence," and the short-term consolidation trend is unlikely to change.
However, the continued betting on interest rate cuts may lead to the end of the rate cut window. Geopolitical crises have eased considerably compared to the beginning of the year, and there is indeed room for a dollar rebound. Meanwhile, easing inflation has increased the real yield in the market, so there is no reason to be overly optimistic about gold.
The dynamic evolution of the aforementioned core variables will jointly determine the subsequent trend of gold. Investors are advised to maintain flexible positions and adjust their trading strategies in a timely manner based on the outcome of key events.
From a technical perspective, spot gold against the US dollar (XAU/USD) still maintains a healthy bullish structure, but it is currently consolidating below the $4,350 resistance level. If it breaks below the 5-day moving average during the session, there will be signs of weakness, and if it closes below the 5-day moving average, the probability of weakness will increase.
The support level remains at the 5-day moving average and the upward trend line, followed by the important support level at 4236.
The resistance levels are at the middle and upper rails of the upward channel, as well as the new high of 4381. During the trading session, pay attention to the breakout at 4353.
(Spot gold daily chart, source: FX678)
At 21:49 Beijing time, spot gold was trading at $4,339 per ounce.
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- 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.
