On Thursday (December 18), during the US trading session, the US November Consumer Price Index (CPI) unexpectedly weakened, driving a rebound in US stocks and putting downward pressure on the US dollar. Normally, such a move in the dollar would be beneficial for gold. However, this time was different—at least not immediately: gold prices initially dipped sharply after the data release (reaching a low of around 4310), then quickly rebounded and rose above 4370, with gains approaching 0.8% at one point, before rapidly falling back, ultimately returning to levels seen before the data release (currently priced at 4337.69, a slight decrease of 0.01% from the previous value).



The US November Consumer Price Index unexpectedly weakened, causing US stocks to rebound while the US dollar weakened. Normally, this dollar movement should be beneficial for gold, but this time it wasn't. To be precise, gold prices didn't rise immediately; instead, they first fell back to test the bottom before rebounding (even surging at one point), but ultimately gave back those gains and returned to a range-bound pattern. Currently, gold prices are approaching the historical record set in October, just a step away from a new high, and short-term gold price forecasts remain optimistic. However, looking ahead to 2026, the market environment for gold may not be as favorable as in 2025.

A weaker US consumer price index has both positive and negative effects on gold.

The surge in gold prices in recent years has been partly due to high inflation eroding the value of fiat currencies. Now, with inflation falling much faster than expected, gold's appeal as an inflation hedge has diminished. Therefore, a pullback in gold prices (especially a rapid decline after the initial surge) following the release of the Consumer Price Index report is understandable. However, it is premature to conclude that gold prices have peaked.

The overall annual inflation rate in the United States is only 2.7%, which opens up room for the Federal Reserve to cut interest rates as early as 2026. The expectation of a rate cut should continue to suppress the dollar's performance, but whether this means that the downside for gold prices is limited remains to be seen.

After all, considering the impact of the previous US government shutdown on data collection, the market inevitably has doubts about the credibility of this inflation report. Therefore, the market should avoid overreacting to single-month data and wait for the December inflation report to be released in January next year. In addition, the "rise and fall" in gold prices after the release of this data also reflects the market's divergence in the logic of "rapid decline in inflation → Fed rate cut": some funds took advantage of the positive news to take profits, while the buying power of bargain hunters did not fully keep up.

Nevertheless, one thing is clear: the actual impact of tariffs on inflation is far more moderate than many expect. Coupled with calendar effects, recent oil price declines, and slowing wage and job growth, inflation is likely to remain low in 2026. All of this points to a simple conclusion: the Federal Reserve may implement more interest rate cuts in 2026. And the "declining real interest rates" during this rate-cutting cycle remain one of the core logics supporting gold prices in the long term, meaning that short-term fluctuations and corrections are unlikely to change the overall trend of gold.

Technical Analysis



From a technical perspective, the path of least resistance for gold remains upward, and a bullish breakout would not surprise the market. After all, gold prices have been rising against the trend throughout the year.

I will focus on two possible price movements going forward: the formation of a double top pattern and a false breakout. However, as long as gold prices continue to reach higher highs and lower lows, the technical outlook for gold prices will remain optimistic.