Gold prices stabilize at high levels amid index competition

Gold prices stabilized at high levels amid competition from easing indicators and inflation data.

Market Review: On Thursday (December 18), supported by the Federal Reserve’s easing signal, global gold prices generally remained stable. But a stronger dollar limited the possibility of further price increases. Spot gold finally closed down 0.2% to $4,333.12 per ounce, showing a clear consolidation pattern throughout the day. Silver prices continue to hover near all-time highs, indicating overall resilience in the precious metals market.

📊 Fundamentals are mixed, which puts gold in an interesting predicament.

The current competition between long and short factors in the gold market is fierce:

Positive factors:

The Federal Reserve’s easing signals continue to generate positive responses: Governor Waller said that “if inflation continues to decelerate, gradual easing may be initiated,” laying the foundation for expectations of easing monetary policy in 2026.

Inflation data were lower than expected: November’s CPI growth rate was 2.7% year-on-year (expected to be 3.1%), and core CPI growth was 2.6% (expected to be 3.0%). Both figures were lower than expected, easing concerns about persistent inflation and removing some obstacles to future rate cuts.

Escalating geopolitical risks: The U.S. blockade of Venezuelan oil tankers and waning optimism over peace talks between Russia and Ukraine have heightened geopolitical uncertainty, prompting safe-haven funds to refocus on gold.

Falling U.S. Treasury yields: Falling yields on 10-year and 30-year U.S. Treasury bonds lower the opportunity cost of holding gold.

limit:

The U.S. dollar index remains strong: The U.S. dollar is trading near one-week highs, weighing on gold prices in dollar terms lower.

Disagreements within the Federal Reserve: Atlanta Fed President Bostic called for “maintaining monetary policy unchanged” and opposed premature interest rate cuts, leaving the market in uncertainty about the path of monetary policy.

Real yields rise slightly: As inflation slows, rising real yields put short pressure on the non-interest-bearing asset gold.

📈 Technical Analysis: Consolidation at high levels indicates a possible correction

Daily chart: Gold prices continue to fluctuate in the range of $4270-4350. The overall bullish structure still exists, but the upward momentum has significantly weakened. The daily chart closed with a small bearish candle, indicating that selling pressure at higher levels is building.

4-hour chart: The short-term moving average begins to deviate downward. After continuous fluctuations, the price gradually broke through the moving average support level, showing signs of weakness. Currently, the price fluctuates frequently around the center line of the channel. If there is no quick move back above $4,340, a test of the lower channel support is likely.

critical level

Upward resistance: 4345-4350 (intraday collective resistance), 4380, 4400

Downward support: 4270-4280 (lower channel line and front assembly platform)

🎯Trading strategy: In a market that fluctuates within a specified range, buy when the price falls and sell when the price rises, focusing on the direction of the breakthrough.

Short-term strategy: Gold prices are currently in a high consolidation stage, with no obvious breakthrough trend. It is recommended to trade within a specific price range, focusing on buying when prices fall and selling when prices rise at key levels.

Strong buy position: It is recommended to open a small buy position at the current price of 4320-4325, with a stop loss order at 4290 and a target price of 4355-4380.

Conservative short position: It is recommended to sell when the price rebounds to 4345-4350, with stop loss order at 4370 and target price at 4300-4280.

Mid-term focus: If gold prices fall below the 4270 support level, the downside potential may increase, and the price target is the 4230-4200 area. On the other hand, if the price stabilizes above 4350, it could retest the 4400 psychological support.

😊 Sentiment and market rhythm: Be patient and wait for the market to determine its direction.

The recent market trends are very disappointing! Despite constant good news, gold prices have struggled to rise and frequently fluctuated at high levels. This reflects the prevailing psychological contradiction in the market at this time, that is, the market expects a change in the Fed’s stance, but at the same time is worried about a return of inflation; he wants to buy, but is afraid of missing the opportunity to rise.

I believe that the logic of gold’s mid- to long-term bull market still holds (rate cut cycle + geopolitical risk + central bank gold purchase), but a sharp correction is indeed needed in the short term to release speculative positions and gain momentum. Therefore, you don’t have to worry about every fluctuation; instead, you can speculate on the long term by leveraging trades within a specific range.

💡Important reminder: With the emergence of a large number of recent data and events, market volatility may intensify. It is necessary to control the size of the position, strictly abide by the stop loss order, and never hold a losing position!

🤝 A few words about position closing and strategic planning

If you are holding a long position at a high level, or a short position at a negative level during market volatility, don’t worry! The biggest taboo in the volatile market is to rush to stop losses and chase highs and lows. We can develop a plan based on your position size and restocking costs, including gradually reducing the average restocking price, hedging open positions or swing trading to reduce costs.

Market conditions are constantly changing, but strategies can be planned ahead. If you are unsure about the current trend, or want to receive instant reminders of entry and exit points and position advice, please leave a message or private message for discussion. Let us jointly respond to market risks, protect profits, and control price declines!

The road may be bumpy, but the future is bright! The bullish logic for gold remains; all it requires is a little more patience and a more considered approach. ✨