Zhang Jinlei: Stay Alert for Technical Pullback After CPI Rally, Adopt High-Sell-Low-Buy Strategy for Gold Today

On December 19, gold experienced a rally followed by a retreat yesterday. The Asian session opened with a slight decline, while the European session saw a rebound from above 4310, triggering long positions. The U.S. session then pushed prices higher, with long positions automatically closing at 4360. However, most gains were erased by the close, leaving gold at $4,331, forming a small bearish candlestick on the daily chart.

On Friday (December 19), the November CPI data showed a year-on-year increase of 2.7%, significantly below the expected 3.1%. Core CPI growth slowed to 2.6%, marking the lowest level since early 2021. This reinforced expectations for the Fed to continue rate cuts in 2026. However, the faster-than-expected decline in inflation weakened gold’s short-term appeal as a traditional inflation hedge, prompting some profit-taking after the rally.

Unlike the previous safe-haven frenzy triggered by U.S.-Venezuela tensions, the marginal effect of geopolitical risks is now fading. Market attention is focused on the anticipated resumption of U.S.-Russia negotiations this weekend, which could ease concerns about escalating geopolitical tensions and justify some safe-haven outflows, capping gold’s upside after the CPI release.

Technically, overnight volatility confirmed strong resistance levels, increasing the likelihood of a pullback. The hourly chart suggests a potential sideways consolidation, but prolonged consolidation raises the risk of a sharper short-term decline. Key support lies at 4300-05, with a break potentially leading to a test of 4280-70.

In summary, rapid cooling inflation has bolstered rate-cut expectations (long-term bullish) while temporarily dampening short-term gold demand, leaving the market in wait-and-see mode. As the week concludes, range-bound trading is likely, reducing the odds of a directional breakout. The core strategy should revert to "high-sell-low-buy, avoid chasing trends in consolidation."

Today’s trading recommendations: Gold: Sell at 4323-4325, stop loss at 4335, target 4280-4260.

Key economic data and events for December 19, 2025 (Friday): 21:30 – Fed’s Williams interview on CNBC 23:00 – Eurozone December Consumer Confidence Index (preliminary) 23:00 – U.S. December Michigan Consumer Sentiment Index (final) 23:00 – U.S. December One-Year Inflation Expectations (final) 23:00 – U.S. November Existing Home Sales (annualized)