US Inflation Cools, Why Is Gold Falling?
Gold prices weakened slightly on Friday (December 19th) during the Asian session, after the market responded to lower-than-expected US inflation data. However, gold's decline appeared limited as expectations of a Fed interest rate cut remain the main driver of the medium-term trend.
In recent trading, spot gold was trading at $4,327/oz, with a daily range of around $4,309–$4,337, while on a weekly basis, there is still a chance of closing higher. However, gold's rally was restrained by the dollar's strengthening, approaching a one-week high, making gold relatively more expensive for non-USD buyers.
From a fundamental perspective, the initial trigger was the lower-than-expected US CPI report for November, which reinforced market speculation that the Fed has room to ease policy going forward. However, this effect did not directly boost gold, as declining inflation also reduced the urgency for investors to hold gold as an inflation hedge—resulting in profit-taking after the previous strong rally.
In addition to the dollar, the market is also monitoring movements in US bond yields. The 10-year yield is around 4.14%, which tends to dampen the performance of non-yielding assets like gold when yields rise or remain high.
Meanwhile, today's market focus is also on the University of Michigan Consumer Sentiment (final release for December). This data often influences expectations for future consumption and inflation, potentially triggering volatility in the dollar and gold ahead of the close.
Today's Technical Outlook
Technically, gold's broad trend structure remains positive as prices remain near their historical peaks. However, intraday, gold is entering a consolidation phase after a rally, so it's natural for there to be some tension around the psychological area. Areas most closely watched by market participants:
Support: $4,300, then $4,285–$4,275, then $4,250
Resistance: $4,350, then $4,381 (peak area), then $4,400
Predicted closing area for today, Friday (12/19)
With liquidity starting to thin ahead of the holiday, the most realistic scenario is for gold to close in the $4,310–$4,345 range. If the dollar weakens following the Michigan release, there's a chance for a "final push" towards $4,350. Conversely, if the dollar strengthens and yields remain high, gold could potentially test $4,300 before the close.
Outlook for next week
Next week, the market will enter holiday mode (thinner volume), allowing for more volatile movements even without major news. In the US, attention is focused on a number of delayed releases, such as GDP (Q3) and durable goods orders, as well as the PCE data update on Tuesday, December 23—these could shift interest rate expectations and move the dollar-gold pair.
For next week's direction, gold's bias remains sideways-bullish as long as it remains above $4,300: a retest target of $4,350 → $4,381, and a clean breakout will see the market begin to eye $4,400. However, if gold consistently closes below $4,300 daily, the correction could widen to $4,275 to $4,250 before buyers return.
Source: Newsmaker.id
