Last week (December 8-12), the international spot gold price experienced high volatility. Opening at $4,196.79 per ounce, it hit a low of $4,170.06 and a high of $4,353.43 before closing at $4,300.38, marking a weekly gain of $104.24 or 2.48%. The weekly candlestick closed in positive territory.
Market analysis suggests that while expectations for further Fed rate cuts strengthened, driving gold prices upward and briefly breaching the $4,350 level, profit-taking emerged after some Fed officials voiced strong opposition. Spot silver retreated over 5% from its highs.
Looking ahead, the market awaits the U.S. November nonfarm payrolls and inflation data, which could heighten gold price volatility. These key economic indicators may also set the stage for gold to challenge historical highs. However, with year-end approaching, last Friday’s sharp decline hints at potential technical adjustments, suggesting precious metals may enter a consolidation phase before year-end.
The Fed cut rates by 25 basis points as expected, lowering the benchmark rate to 3.50%-3.75%, while announcing a short-term Treasury purchase program. Fed Chair Powell emphasized that the move aims to maintain ample reserves and is not a shift in monetary policy stance. The 9-3 voting split revealed internal divisions on policy timing, creating a less hawkish tone.
Powell also acknowledged that nonfarm payroll data may be systematically overestimated by 60,000 jobs monthly, implying actual job growth could be negative (-20,000). This has tilted the Fed’s focus toward employment protection. Recent ADP data showed modest private-sector job gains (4,750 weekly), while JOLTS reported October job openings at 7.67 million. However, initial jobless claims unexpectedly surged to 236,000, reinforcing expectations for further rate cuts and weighing on the dollar.
Despite the Fed’s dot plot projecting only one 2026 rate cut, markets remain firm on at least two cuts. Divisions persist among officials, with Cleveland Fed President Mester (gaining 2026 voting rights) favoring restrictive rates to curb inflation, pushing 30-year Treasury yields up 6 bps. Kansas City Fed President Schmid (losing 2026 vote) opposed the cut, citing persistent inflation and economic momentum.
This week, attention turns to speeches by Fed Governor Mester and New York Fed President Williams, along with delayed November nonfarm payrolls (December 16) and CPI data (December 18). Economists forecast 35,000 new jobs; weaker data could pressure the Fed to cut further, weakening the dollar and boosting gold. Conversely, higher CPI (currently 3% vs. Fed’s 2% target) may revive the dollar.
Despite gold’s underperformance versus silver, bullish sentiment remains strong. Kitco’s survey shows widespread institutional optimism, while retail investor bullishness rose. CME gold open interest increased by 35,712 contracts for the second straight week, and SPDR Gold Trust holdings grew by 2.87 tons to 1,053.12 tons.
Technically, gold failed to break resistance at $4,354.40, retreating over $90 but holding above $4,250. Key resistance lies at $4,354-$4,375, with critical levels at $4,381-$4,385. Support is at $4,250-$4,200, with a break below $4,185-$4,150 risking deeper declines.
Domestically, Shanghai gold futures face resistance at ¥992-1,002/gram (target ¥1,020-1,040), with support at ¥965-955 (critical at ¥945-935). Silver futures resistance is at ¥15,200-15,600/kg (key ¥16,000-16,600), with support at ¥14,500-14,200 (critical ¥13,500).
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