On December 23, COMEX gold prices fell to $2,629.3 per ounce, down by 0.60%, while domestic SHFE gold night session saw sideways fluctuations, closing at 616.50 RMB per gram with a 0.11% increase. Influenced by the high level of the US dollar index and market adjustments on global rate cut expectations, gold's short-term trend remains weak, and a volatile market is expected to continue.
Strong Performance of the US Dollar Index
The US dollar index, having reached a two-year high last week, is now stable around the 108 mark, with an increase of 0.4%. The market believes that the Federal Reserve is likely to maintain rates at their current level in the January meeting, while ECB President Lagarde recently stated that the European Central Bank is close to achieving its 2% inflation target, possibly opting for more significant rate cuts than the Federal Reserve. The dollar's advantage over the euro allows it to remain a favored asset for safe-haven funds, exerting downward pressure on gold.
Divergent Performance of US Economic Data
Recently, US economic data has shown a mixed picture of recovery and weakness. The Conference Board's Consumer Confidence Index for December fell from 111.7 to 104.7, marking a three-month low; Durable goods orders in November fell by 1.1% month-on-month, the largest decline in six months. Meanwhile, new home sales in November rebounded, but house prices decreased by 6.3% year-on-year to $402,600, indicating signs of recovery but persistent pressure in the real estate market.
Short-term Pressure on the Gold Market
The strong performance of the US dollar directly suppresses the safe-haven appeal of gold, with COMEX gold experiencing significant declines on December 23, while domestic gold prices maintain a volatile stance. The high level of the US dollar index and slowing rate cut expectations result in insufficient momentum for gold to rebound, leading to cautious market sentiment.
Outlook: Predominantly Weak Volatility
In the short term, the gold market may continue to feel the pressure from the strong US dollar, making significant price rebounds unlikely. Investors should pay attention to the policy dynamics of major global economies, particularly the decisions and future rate adjustments of the Federal Reserve and the European Central Bank. Additionally, key economic data releases on inflation, employment, and consumer confidence will be important variables influencing gold's trend.
Overall, gold prices are expected to exhibit weak short-term fluctuations, although long-term support may arise from economic and policy uncertainties.
