Unexpectedly mild inflation triggered profit-taking, causing gold prices to fall below $4,350, but the bullish structure remains intact.
2025-12-19 10:01:01
During Friday's Asian trading session, international gold prices (XAU/USD) fell below $4,350, continuing the consolidation trend of the previous trading day.
This pullback was mainly due to profit-taking and long position reduction in short-term contracts, without any obvious trend-driven selling pressure. After repeatedly hitting new highs, some funds chose to temporarily exit the market and observe, putting short-term pressure on gold prices.
From a macroeconomic perspective, the medium-term support logic for gold prices remains unchanged. The latest US inflation data was significantly lower than market expectations, and the cooling inflation has strengthened market expectations for further interest rate cuts by the Federal Reserve.
In a declining interest rate environment, the opportunity cost of holding gold decreases, a factor that typically provides a sustained boost to non-interest-bearing assets. Some institutional economists have pointed out that the larger-than-expected decline in US inflation helps create conditions for further easing of monetary policy in the future.
Furthermore, geopolitical uncertainties continue to provide safe-haven support for gold. The escalating tensions between the US and Venezuela are causing some funds to continue allocating to safe-haven assets. Meanwhile, robust industrial demand and medium- to long-term investment demand are also limiting the potential for further price adjustments in gold.
It's important to note that the previous government shutdown in the United States affected the statistics and completeness of some economic data, causing the market to remain cautious in interpreting inflation trends. In the short term, investors will pay close attention to the upcoming University of Michigan Consumer Sentiment Index to determine the direction of changes in inflation expectations and consumer confidence.
From a technical perspective, gold maintains a clear bullish trend overall. Prices are trading above key moving averages, with both highs and lows rising, indicating the trend remains intact. Gold prices are holding firmly above the 100-period exponential moving average, and the medium-term upward channel remains intact.
The RSI is running above the midline, and although it has pulled back, it remains in a strong zone, indicating that the bulls still have the upper hand. The Bollinger Bands continue to widen, suggesting that the market still has room to expand further. Short-term resistance is formed around $4350, which corresponds to the upper Bollinger Band area.
If gold prices break through this level, they may retest the historical high of $4,381 and further target the psychological level of $4,400. On the downside, $4,300 is a key short-term support level; a break below this level could extend the correction to $4,270, with stronger support around the medium-term moving average area near $4,240.
Editor's Note:
Overall, the current pullback in gold prices is more likely a consolidation at higher levels than a trend reversal. Cooling inflation and expectations of interest rate cuts provide core support in the medium to long term, while continued geopolitical uncertainty provides gold with a safe-haven premium. Short-term fluctuations do not change the overall bullish trend for gold.
This pullback was mainly due to profit-taking and long position reduction in short-term contracts, without any obvious trend-driven selling pressure. After repeatedly hitting new highs, some funds chose to temporarily exit the market and observe, putting short-term pressure on gold prices.
From a macroeconomic perspective, the medium-term support logic for gold prices remains unchanged. The latest US inflation data was significantly lower than market expectations, and the cooling inflation has strengthened market expectations for further interest rate cuts by the Federal Reserve.In a declining interest rate environment, the opportunity cost of holding gold decreases, a factor that typically provides a sustained boost to non-interest-bearing assets. Some institutional economists have pointed out that the larger-than-expected decline in US inflation helps create conditions for further easing of monetary policy in the future.
Furthermore, geopolitical uncertainties continue to provide safe-haven support for gold. The escalating tensions between the US and Venezuela are causing some funds to continue allocating to safe-haven assets. Meanwhile, robust industrial demand and medium- to long-term investment demand are also limiting the potential for further price adjustments in gold.
It's important to note that the previous government shutdown in the United States affected the statistics and completeness of some economic data, causing the market to remain cautious in interpreting inflation trends. In the short term, investors will pay close attention to the upcoming University of Michigan Consumer Sentiment Index to determine the direction of changes in inflation expectations and consumer confidence.
From a technical perspective, gold maintains a clear bullish trend overall. Prices are trading above key moving averages, with both highs and lows rising, indicating the trend remains intact. Gold prices are holding firmly above the 100-period exponential moving average, and the medium-term upward channel remains intact.
The RSI is running above the midline, and although it has pulled back, it remains in a strong zone, indicating that the bulls still have the upper hand. The Bollinger Bands continue to widen, suggesting that the market still has room to expand further. Short-term resistance is formed around $4350, which corresponds to the upper Bollinger Band area.
If gold prices break through this level, they may retest the historical high of $4,381 and further target the psychological level of $4,400. On the downside, $4,300 is a key short-term support level; a break below this level could extend the correction to $4,270, with stronger support around the medium-term moving average area near $4,240.
Editor's Note:
Overall, the current pullback in gold prices is more likely a consolidation at higher levels than a trend reversal. Cooling inflation and expectations of interest rate cuts provide core support in the medium to long term, while continued geopolitical uncertainty provides gold with a safe-haven premium. Short-term fluctuations do not change the overall bullish trend for gold.
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