On Monday (December 23), during the early morning session in Asia, spot Gold fluctuated in a narrow range and is currently trading around $2622.13 per ounce. Gold prices surged nearly $30 last Friday, supported by a weaker dollar and US Treasury yields, following US economic data indicating slowing inflation, but the hawkish interest rate outlook from the Federal Reserve is expected to record weekly declines for Gold, in addition, statements from several Federal Reserve officials supporting a slowdown in rate cuts next year still cause some caution among Gold bulls.

Despite the increase in US Consumer spending in November and strong demand for various Commodities and services, highlighting economic resilience. The US Department of Commerce's Bureau of Economic Analysis stated that Consumer spending increased by 0.4% in November, with a forecast of 0.5% growth. Adjusted for inflation, Consumer spending increased by 0.3%. Personal income rose by 0.3%, with wages increasing by 0.6%. After accounting for inflation, household disposable income grew by 0.2%. The savings rate dropped to 4.4%. However, the PCE price index rose by 0.1% month-on-month and increased by 2.4% year-on-year. The core PCE price index rose by 0.1%, the smallest month-on-month increase since May. This Indicator rose by 2.8% year-on-year.

The dollar dropped 0.6% last Friday from a two-year high, closing at 107.81, marking the largest single-day decline since December 5, which reduced the price of Gold for overseas buyers, as US Treasury yields also fell from a six-month high, with the 10-year US Treasury yield dropping 1.1% last Friday, the largest single-day decline since November 29.

Adam Button, chief currency Analyst at ForexLive, said: "The latest inflation data is much milder than people are worried about; the Federal Reserve shifted the focus back to inflation in this week's meeting, and the data is less concerning. I think the market heard what the Federal Reserve said and began to worry about inflation. But the subsequent data shows that inflation is still slowing and certainly has not reached concerning levels."

"It's not only the PCE data; personal income data and personal spending data are also weaker than expected," said Phillip Streible, chief market strategist at Blue Line Futures: "We see people returning to the Gold market, rebuilding positions."

Additionally, the uncertainty surrounding Trump's policy outlook has also supported Gold prices, as the incoming Trump administration plans to implement tax cuts, impose or raise tariffs on imported goods, and deport millions of undocumented immigrants.

"Given the significant rise in the dollar, the overall trend of declining inflation remains unchanged for the next two months," said Brian Bethune, an economics professor at Boston College: "However, if the incoming administration significantly raises tariffs, it will provoke retaliation and usher in a period of stagflation similar to the 1970s."

Last Friday, USA President Trump stated that the EU should increase imports of American Oil & Gas; otherwise, the USA will impose tariffs on goods like Autos and Machinery exported to the EU.

According to data from the US government, the EU has already purchased a significant share of the USA's Oil & Gas exports. The USA is currently exporting at full capacity, with no additional production available for export, but Trump has pledged to further increase the USA's Oil & Gas output.

The geopolitical situation continues to concern the market.

On the 22nd local time, the Israel Defense Forces continued to launch attacks on multiple locations in the Gaza Strip. A spokesman for the Gaza Civil Defense stated that the attacks by the Israel Defense Forces from the night of the 21st to the 22nd have resulted in the deaths of at least 28 Palestinians, including 4 children.

On the 22nd local time, the Russian Ministry of Defense reported that the Russian military had taken control of 2 settlements in the past day and targeted the Ukrainian military airport infrastructure, Drone factories, foreign mercenaries' assembly points, and intercepted Ukrainian Missiles, rockets, and 100 Drones.

Two informed sources revealed that the Biden administration will announce the final batch of Ukraine security assistance plans in the coming days, spending the remaining funds allocated for purchasing new Weapons for Ukraine. A third source stated that the plan includes air defense interception systems and munitions, but the specific details will only be known when the plan is announced in the coming days. They noted that the scale of aid in this plan is approximately 1.2 billion dollars.

However, the latest remarks from Federal Reserve officials lean towards supporting a slowdown in future interest rate cuts, which may suppress Gold prices.

New York Fed President Williams stated last Friday that he expects to implement more interest rate cuts, but he noted that such cuts will be driven by new data while policy still restrains economic growth momentum. Even if there is a rate cut this week, he believes that 'our monetary policy remains highly restrictive', meaning that short-term interest rates are still restraining the economy, which should help further alleviate inflationary pressures. As for the next direction of monetary policy, 'the baseline trajectory is a move towards neutral interest rates.'

San Francisco Fed President Daly stated that the Federal Reserve's decision to cut rates by another 25 basis points is a "difficult decision" and added that she agrees with Powell's view that caution is needed for further policy adjustments.

Cleveland Fed President Harmack stated that she opposes this week's rate cut decision, as the strength of the economy and inflation outlook do not support easing of policies. She expressed a desire to keep the monetary policy stable "until we see further evidence that inflation is returning to the path towards our 2% target," as the monetary policy is "not far" from a neutral position.

Chicago Fed President Goolsbee stated that he now expects the rate cut path for 2025 to be shallower than previously anticipated, but added that he still believes the Federal Reserve's policy rates will have "meaningful reductions" next year.

FXStreet Senior Analyst Joseph Trevisani said: "Before and after Wednesday's Federal Reserve meeting, it's basically a rate game; it’s not that they did anything, but the catalyst is a change in economic forecasts for next year's federal funds rate. The market sees that the Fed is rolling back. I have always believed they would pause rate hikes in January. I am quite sure they will do that."

Data from LSEG shows that the market currently believes that the earliest potential rate cut might be in May with a probability of 62%. Last Thursday's expectations were for the earliest cut to be in June, with a likelihood of 65%.

Market activity may be relatively subdued this week as the Christmas holiday approaches for European and American countries, with most overseas markets likely to close, and economic data being relatively sparse, which may limit trading interest. This trading day should pay attention to the US December Conference Board Consumer Confidence Index and news related to geopolitical situations.

(Spot gold daily chart, source: E-Huitong)

As of 07:38 Beijing time, spot Gold is currently quoted at 2623.14 USD/ounce.

For selected articles from Huizhong, please check the VIP section. Only the latest version of the upgraded APP can access the VIP section.