Recently, the Gold market has experienced complex fluctuations. Although Gold prices rose following the latest inflation data from the USA, it still could not avoid downward pressure this week. Spot Gold closed at $2622.56 per ounce on December 20, with a weekly cumulative decline of 0.98%. The pullback of the US dollar and US Treasury yields provided some support for Gold, but expectations of the Federal Reserve's hawkish policy continue to suppress Gold, making market sentiment more cautious.

Fundamental Analysis

From the latest November PCE (Personal Consumption Expenditures) data released by the USA, the slowdown in inflation has provided short-term support for the Gold market. According to the report, the November PCE price index rose by only 0.1% compared to the previous month, lower than the earlier market expectation of 0.2%. This change indicates that inflationary pressures in the USA have temporarily eased, and the market is starting to reassess the Federal Reserve's monetary policy outlook.

Market strategist Phillip Streible pointed out that, in addition to the weakness in the PCE data, personal income and expenditure data also fell short of expectations, which has prompted investors to return to the Gold market, attempting to hedge future uncertainties by establishing new positions.

However, despite the short-term slowdown in inflation providing some Bullish sentiment for Gold, expectations regarding the Federal Reserve's monetary policy remain a major factor influencing Gold prices. On Wednesday, the Federal Reserve's "dot plot" showed that the expected rate cuts in 2025 would be milder than previously anticipated. The Federal Reserve plans only to cut rates twice in 2025, each by 25 basis points, indicating that even if inflation eases, the tightening monetary policy will continue for some time. This hawkish signal has somewhat weakened Gold's upward momentum.

Technical Analysis

Despite facing some downward pressure this week, Gold prices have still found strong support around $2620 on a technical level. According to market analysis, this Resistance has shown strong stability over the past few trading days, allowing Gold prices to maintain above this level even in the context of a more hawkish expectation for Federal Reserve policy. This indicates that the long-term demand for Gold as a safe haven remains, especially in uncertain macroeconomic and political environments.

However, commodity Analyst at TD Securities suggests that Gold may face downward risks in the short term, especially in a market with high uncertainty regarding the Federal Reserve's policies. If economic growth slows in the coming months while inflation data remains elevated (for instance, potential inflationary pressures triggered by Trump's tariff comments), Gold prices could retreat. Analysts expect Gold prices may revisit the November lows, at a level of $2537 per ounce.

External factors and market sentiment.

In addition to the Federal Reserve's monetary policy, geopolitical risks remain an important support factor for the Gold market. The risk of a government shutdown in the USA increases political uncertainties, which enhances the market's demand for Gold as a safe-haven asset. Analyst Chris Mancini, Vice President, indicates that the potential risk of a government shutdown reflects the current instability of domestic politics in the USA, providing long-term support for the Gold market.

Similarly, Ryan McIntyre also stated that although Gold may experience fluctuations in the short term, long-term geopolitical and financial market uncertainties will continue to support the demand for Gold as a safe haven. He believes that even if Trump's tariff comments and other policy uncertainties negatively impact the economy, investors will still seek safe-haven assets like Gold to hedge against potential risks.

Future Outlook

Looking ahead, the short-term trend of Gold may be influenced by multiple interwoven factors. The Federal Reserve's monetary policy and upcoming economic data releases will be key factors affecting Gold prices. If economic data continues to be weak, especially if inflation remains low, the market may begin to anticipate that the Federal Reserve's future rate cuts could slow down further, thereby placing more downward pressure on Gold.

However, from a longer-term perspective, geopolitical uncertainties, turmoil in the political situation of the USA, and expectations of a global economic slowdown will continue to provide support for Gold's safe-haven demand. Therefore, even if Gold prices may fluctuate in the short term, it remains an important refuge for global investors amid uncertain environments in the long term.

As the Christmas holiday approaches, market trading volume may further shrink, and the Gold market could see greater volatility. Investors should pay attention to upcoming economic data and geopolitical developments, especially amid the potential financial struggles the USA government may face, as the demand for Gold as a safe haven may further increase.

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