On December 16, the international gold market experienced fluctuations with the COMEX gold initially rising and then falling, closing at $2,670.2 per ounce, a decline of 0.21%. The daily chart formed a doji pattern. The domestic SHFE gold night session opened high and closed low, ending at 620.56 yuan per gram, with a slight increase of 0.06%. Overall, market sentiment remained cautious, and gold prices continued to oscillate at high levels.
India's Trade Deficit Hits Record High; Gold Import Demand Surges
In November, India's trade deficit widened significantly to $37.8 billion, setting a new record high. Analysts pointed out that the surge in import demand and a significant increase in gold imports were the main reasons. With rising geopolitical risks and changes in global trade patterns, India's demand for gold has further increased, supporting international gold prices in the short term while intensifying market volatility.
U.S. Economic Data Divergence; Federal Reserve's Meeting in Focus
The latest U.S. economic data shows that the New York Fed's manufacturing index in December saw a sharp decline, marking the largest drop since May 2023, reflecting continued weakness in manufacturing. However, the service sector's PMI accelerated, reaching its fastest pace in over three years, indicating uneven economic recovery. Additionally, a surge in the price index heightened market concerns about inflation.
The Federal Reserve's meeting this week has become a focal point for the market. Nick Timiraos, known as the "new Fed whisperer," suggested that after an expected rate cut of 25 basis points this week, the Fed might slow down or even halt rate cuts. Goldman Sachs also predicted that the Fed might "skip" a rate cut in January and this week might signal a hawkish slowdown in easing.
Under the expectation of a hawkish rate cut, the dollar index remained relatively strong, limiting further room for gold price increases. Investors are also closely watching the U.S. retail data to be released tonight, which is expected to provide new guidance for the market and further influence the short-term movement of gold prices.
Market Outlook: Gold Prices May Continue to Oscillate
Overall, the gold market is maintaining a high-level oscillation pattern amidst multiple factors such as geopolitical risks, global trade changes, and the uncertainty of Federal Reserve policies.
- India's strong demand for gold provides support;
- The Fed's policy signals, dollar performance, and U.S. retail data are key variables;
- The divergence between weak U.S. manufacturing and expanding services heightens economic data uncertainties, leading to fluctuating market expectations.
In the short term, the movement of gold prices will continue to be influenced by U.S. economic data and the Federal Reserve's meeting guidance, and investors should closely monitor the dollar's trajectory along with further changes in the global macroeconomic environment.
