Gold prices experienced slight fluctuations and rose on Tuesday (December 10), maintaining close to the two-week high reached in the previous trading session, with spot gold currently trading at $2,667.76 per ounce. Investors are awaiting the key U.S. inflation data to be released later this week to further assess the Federal Reserve's interest rate outlook.
Fundamental Analysis:
Bullish Factors:
- China's Central Bank Resumes Buying Gold: After a six-month pause, China's central bank has resumed buying gold, significantly boosting market optimism.
- Global Central Bank Rate Cut Expectations: The Federal Reserve is expected to cut rates by 25 basis points next week. The European Central Bank and the Bank of Canada are also anticipated to cut rates by 25 and 50 basis points respectively this week, while the Swiss National Bank may cut rates by 50 basis points.
- China’s Monetary Policy: The political meeting in China on December 9th pointed out that a moderately loose monetary policy will be implemented next year.
- Geopolitical Instability: Conflicts in Syria continue, and there is no easing in the Russia-Ukraine tensions. President Trump has called for a ceasefire between Russia and Ukraine, with Ukraine seeking a diplomatic resolution to the conflict.
- Rise in New York Fed's Gold Price Expectations: A report from the New York Fed shows consumer expectations for a rise in gold prices over the coming year at 4.9% in November, up from 4.5% in October.
Bearish Factors:
- Rising U.S. Consumer Inflation Expectations: The New York Fed report indicates that U.S. consumer inflation expectations have risen, which might lead to adjustments in the extent of Fed rate cuts.
- Increases in U.S. Dollar and Treasury Yields: The dollar index and U.S. Treasury yields rose on Monday. The dollar index increased for the second consecutive day, and the 10-year Treasury yield rose to 4.2%, recovering all losses from last Friday.
- Decline in Gold ETF Holdings: Holdings in the world's largest gold-backed ETF, SPDR Gold Trust, fell from 871.94 tons last Friday to 870.79 tons, a decrease of 0.13%.
Market Outlook:
The market's attention will focus on the U.S. November CPI data to be released on Wednesday, with core prices expected to rise by 0.3%, and the annual increase projected at 2.7% and 3.3%. This data could impact the Federal Reserve's future rate cut decisions. Despite a rebound in inflation, it remains below the Fed's target level.
