In the early Asian trading session on December 23, spot gold is experiencing slight fluctuations, currently trading around $2,622.13 per ounce. Last Friday, the price of gold increased by nearly $30, supported by a weaker dollar and declining U.S. Treasury yields. The latest U.S. inflation data showed that the PCE price index rose only 0.1% month-over-month in November, with a year-over-year increase of 2.4%. The core PCE grew by 2.8% year-over-year, marking the smallest rise in months, alleviating market concerns about inflationary pressures.
The dollar retreated from a two-year high last Friday, falling 0.6% to 107.81, marking its largest single-day drop since December 5. Meanwhile, the yield on the U.S. 10-year Treasury fell by 1.1%, the largest decline since November 29, further reducing the holding cost of gold and boosting its price.
Blue Line Futures Chief Strategist Phillip Streible commented, "The weaker-than-expected PCE data, along with personal income and spending figures, prompted investors to return to the gold market and reestablish long positions."
Influence of Fed Policy and Official Statements on Gold Prices
Despite support from inflation data, the hawkish stance of Fed officials continued to restrain gold's gains. New York Fed President Williams stated that the Fed will continue lowering interest rates in the future but must adjust the pace based on new data, with current monetary policy remaining highly restrictive. San Francisco Fed President Daly and Cleveland Fed President Mester also expressed cautious attitudes toward current rate cut decisions, anticipating a shallower rate cut path than previously expected.
Geopolitical Factors Increasing Gold Price Volatility
Global geopolitical tensions are also adding uncertainty to the gold market. Intensifying conflict between Israel and Gaza, the U.S.'s plan to provide an additional $1.2 billion in military aid to Ukraine, and the escalation of the Russia-Ukraine war are all supporting risk-averse sentiment.
Trump's Policy Outlook and Inflation Risks
The uncertainty surrounding the incoming Trump administration's plans to cut taxes and raise tariffs is also supporting gold prices. Analysts point out that if the new administration enacts high tariff policies, it could trigger a stagflation environment similar to the 1970s, which would further boost the demand for safe-haven assets.
Outlook and Strategy
Although gold has performed strongly in the short term, the Fed's policy path, U.S. economic data, and geopolitical situations will continue to dominate gold price trends. Investors need to be cautious of gold price volatility and pay attention to how macroeconomic and geopolitical developments potentially impact the gold market. Moving forward, gold may continue to fluctuate amid the interplay of risk-averse demand and policy expectations.
