Precious metals have experienced significant volatility in recent trading sessions, with silver in particular showing substantial fluctuations after reaching high levels. Although the fundamental logic supporting precious metal prices remains unchanged, following a historic rally this year, technical indicators for these metals are beginning to show signs of tilting towards a bearish bias, against the backdrop of ongoing uncertainty surrounding the Federal Reserve's future policy path.
On the fundamental front, the Federal Reserve decided to cut interest rates at its December meeting; however, the meeting minutes revealed that this decision was not a unanimous outcome. Some officials who supported the cut emphasized that the action was a "choice made after weighing the pros and cons," and there was even a possibility of keeping rates unchanged. Most participants believed that if inflation gradually recedes as expected, further rate cuts in the future would be reasonable. Nonetheless, the Fed's meeting minutes have highlighted significant divisions among policymakers for two consecutive times, reflecting the complexity and uncertainty inherent in the current monetary policy adjustments.
Concurrently, regarding the economic outlook, the Federal Reserve's projections for economic prospects have become more optimistic compared to October. From 2025 to 2028, real GDP growth is expected to see a slight increase, primarily benefiting from improved financial market conditions and enhanced potential output growth. After 2025, as the negative impacts of high tariffs diminish, and with fiscal policy and financial markets continuing to support demand, economic growth is expected to remain above potential levels for an extended period. The unemployment rate is projected to decline gradually, potentially falling slightly below the natural rate by 2027. Regarding inflation, forecasts for 2025-2026 have been slightly revised downwards compared to previous estimates, while projections for 2027-2028 remain stable.
Participants generally anticipate an acceleration in US economic growth in 2026, with economic activity broadly aligning with potential output levels over the medium term. Adjustments to fiscal policy, an optimized regulatory environment, and favorable financial market conditions are seen as key supporting factors. However, officials also noted that uncertainty surrounding GDP growth projections remains high. Furthermore, technological advancements, such as artificial intelligence, could potentially boost productivity and foster economic growth without fueling inflation, but attention must be paid to their potential dampening effect on employment growth.
In response to financial system reserves declining to an "ample" level—evidenced by rising short-term funding costs—the Federal Reserve initiated a short-term Treasury bill purchase program in December. The initial plan involves monthly purchases of approximately $40 billion, which will be gradually scaled back subsequently. Market surveys indicate expectations for total purchases of around $220 billion over the next 12 months, although there is considerable divergence regarding the specific scale. As of now, approximately $38 billion in short-term Treasury bills were purchased in December, with two subsequent operations scheduled for January 2025.
From a technical perspective, after hitting a new high of $4548.50 per ounce early this week, the gold price plunged sharply, directly breaking below the key weekly pivot point at $4474 per ounce and the first support level at $4398 per ounce. This indicates the strength of short-term bearish forces, and the weekly trend has shifted from bullish to bearish. The 4-hour chart shows the price action has entered a bearish pattern, and barring unforeseen circumstances, gold prices are highly likely to continue their descent. Selling on rallies is the primary short-term trading strategy. On the downside, support is watched near $4264 per ounce; if the price effectively breaks below this level, support would adjust to near $4188 per ounce. On the upside, resistance is monitored near $4398 per ounce; if the price effectively breaks above this level, resistance would then adjust to near $4474 per ounce.
[Gold Time] is a specialized segment jointly produced by China Economic Information Service and China Gold News, focusing on the gold and jewelry market. It provides comprehensive coverage of policy dynamics, investment information, and risk analysis within the gold and jewelry industry, delivering authoritative, professional, and comprehensive financial information services in this field. China Economic Information Service is the national financial information platform constructed by Xinhua News Agency.
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