On December 19, the precious metals market rebounded significantly following the release of inflation data, with gold prices quickly erasing overnight losses and climbing to a near two-month high, reflecting a notable shift in market sentiment. RadexMarkets noted that easing inflation has provided a basis for market repricing, as gold regains its appeal as a store of value and hedge against risk amid a less hawkish interest rate outlook. February gold futures rose by $28.20 to around $4,400, firmly holding above a key psychological level, signaling investors' sensitivity to macroeconomic shifts.
While silver prices retreated, losses narrowed considerably compared to early trading, primarily reflecting profit-taking after a rapid rally. RadexMarkets stated that silver's pullback after hitting a record high earlier in the week was a normal market adjustment and did not disrupt its overall bullish structure. March silver futures dipped to around $66.25 but remained within a high range, indicating no material change in the medium-term trend.
The inflation data itself fell notably below expectations. December's headline CPI rose 2.7% year-on-year, marking the lowest level in months and undershooting market forecasts of 2.9–3.1%. Core CPI, excluding food and energy, eased to 2.6%, declining more than anticipated. RadexMarkets views this as reinforcing expectations of sustained disinflation, prompting markets to reassess the need for prolonged high interest rates—a supportive factor for precious metals.
Despite missing data for certain months due to statistical anomalies, official cross-month results showed overall price growth of just 0.2% from September to November, further confirming no resurgence in price pressures. RadexMarkets highlighted that in an environment of moderating inflation and economic stability, markets tend to favor bets on policy easing, which typically weakens the dollar and enhances the appeal of non-yielding assets.
External market dynamics also aligned favorably for precious metals. The dollar index softened slightly, while crude oil held steady near $56.50 per barrel. The 10-year Treasury yield retreated to 4.116% post-data. RadexMarkets noted that lower yields reduce the opportunity cost of holding gold, while dollar weakness improves the pricing environment for precious metals, reinforcing their role in portfolios.
From a market structure perspective, gold pricing is shaped by both spot and futures mechanisms, with year-end futures trading typically more concentrated. While current liquidity conditions may amplify short-term volatility, they do not alter the broader trend. RadexMarkets advised investors to focus on price action around key levels rather than being swayed by intraday swings.
Technically, February gold futures remain in a strong uptrend, with bulls targeting $4,433—a key resistance level and contract high. A sustained breakout could open further upside, while support near $4,200 serves as a critical floor. The clear support-resistance framework keeps the trend advantage with bulls, maintaining a high market strength rating.
For silver, despite short-term consolidation, the technical structure remains bullish. Resistance sits at $70, while support around $60 defines the medium-term range. RadexMarkets views silver's pullback as a consolidation phase within the uptrend rather than a reversal.
In summary, cooling inflation, declining yields, and a softer dollar create a favorable backdrop for precious metals. RadexMarkets expects gold's medium-term allocation value to remain prominent as macro expectations adjust, while silver may resume its recovery after consolidation. While short-term volatility persists, the overall trend for gold and silver remains cautiously bullish as long as key support holds.
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