In the financial markets, the performance of gold is often used as a barometer for broader economic trends and sentimentOn December 18 — a key trading day for international gold prices — significant fluctuations took place, resulting in a drop that pushed prices below the critical 100-day moving average support levelThis shift underscored a strengthening bearish sentiment and an inclination towards corrective movement, primarily favoring short positionsSuch dynamic shifts highlight the intricate relationship between gold prices and prevailing economic conditions, as investors navigate uncertain waters.

The day commenced with gold prices opening at approximately $2,646.01 per ounce in the Asian marketsThroughout the trading session, gold prices oscillated within a volatile $10 rangeOn reaching a day high of $2,651.52 at 9 AM during the Asian session, the market was soon confronted with mounting selling pressure following developments in the Gaza ceasefire negotiations

As negotiations progressed, the demand for gold as a safe-haven asset diminished, leading to further declines in price despite a mixed bag of economic data resulting in relatively limited price fluctuations in the hours that followed.

As the US trading session unfolded, the narrative shifted markedlyBy 3 AM, the Federal Reserve implemented its anticipated 25 basis point interest rate cutThis decision set off a typical market reaction, where buy-the-rumor, sell-the-fact trading patterns caused the gold market to retract furtherThe Fed’s accompanying statement hinted at a slowdown in the pace of future rate cuts, evidenced by adjustments to the dot plot, which reduced expectations from four anticipated rate cuts next year to just twoConcurrently, the US Dollar Index surged to a two-year highFed Chair Jerome Powell's commentary suggested a more cautious approach to future rate decisions, with progress on inflation reduction guiding future monetary policy

All these factors collectively exerted downward pressure on gold prices, ultimately dipping to a low of $2,583.76 before rebounding slightly to close at $2,585.47. The day concluded with gold seeing a regrettable swing of $67.76, marking a loss of $60.54, translating to a drop of 2.29% in value.

Looking ahead to December 19, the anticipated trend indicated a potential rebound in gold pricesThis positive shift was expected to stem from yesterday’s recovery buy pressure and a tapering bullish impetus in the US Dollar IndexHowever, technical analyses suggested that gold would still face significant resistance in the short term.

A closer examination of the daily movements of the US Dollar Index reflects a notable rebound that strengthened bullish momentum as the Bollinger Bands expanded upwardEven with a possibility of intraday pullbacks, the overall trend remains bullish, reinforcing that short-term weakness would likely offer only limited support for gold prices

Prices are anticipated to face resistance from both the 100-day and 30-day moving averages as they attempt to rebound.

Moreover, the 10-year US Treasury yields also experienced a considerable rebound, breaking through a prolonged downtrend line, which reinforces the bullish outlookWith accompanying indicators signaling persistent bullishness, and the weekly trend indicating enhanced outlooks from those breakouts, there’s a clear indication that the medium-term could witness bullish rebounds, arguably translating to adverse pressures on gold prices.

Summarizing the situation at hand, while a rebound in gold pricing is expected toward week’s end, the likelihood of significant upward momentum appears limitedPrice targets hovering around the 100-day and 30-day moving averages should be approached with skepticism, considering potential resistanceMarket participants are advised to focus on upcoming economic indicators, including unemployment claims, the adjustment of the third-quarter GDP, and core PCE data, which could weigh on gold prices more heavily, primarily if they come in below expectations.

From a fundamental perspective, the recent Fed rate cut of 25 basis points aligns with a broader economic strategy characterized by a cautious approach to monetary policy

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The reduction in expected rate cuts next year — halved from four to two — effectively bolstered the dollar, leading to dramatic declines in gold pricesNevertheless, these shifts in sentiment aren’t necessarily indicative of increasing bearish factors; rather, they reflect diminishing bullish momentum, fostering conditions for potential rebounds in gold whenever pullbacks occur.

Furthermore, despite the restrained outlook in terms of rate cuts, Powell conveyed that achieving inflation targets may take additional time, with few prospects for interest rate hikes next yearMeanwhile, a notable deficit recorded in the third quarter’s current account further illustrates potential vulnerabilities in the US economyThis backdrop indicates that adverse factors may remain muted through 2025, leaning towards reduced bullish momentum but not outright negative conditions affecting gold’s pricing heavily.

Global economic policies that exacerbate trade tensions can stir unrest and substantially disrupt economic growth trajectories

An uncertain economic landscape may see an uptick in gold demand as inflation concerns lingerAdditionally, proposed tariffs could yield unintended consequences; the potential for increased inflation could offset benefits from tax cuts, prompting economic downturns evidenced by an estimated 1.7% decrease in GDPThe Consumer Price Index’s projection remains above the Fed’s target for the next few years, further complicating any potential recovery as low growth converges with high inflation; conditions typically favorable for gold bulls.

Lastly, while the dollar strengthens presently, technical analyses display considerable divergences at peak levels which foreshadow possible bearish tendencies in the futureSpeculations indicate that by 2025, the dollar could weaken against both the Euro and Yen while potentially appreciating against the British PoundSuch movements could likely provide the necessary support to push gold prices higher in that timeframe.

Examining demand, recent reports from the World Gold Council indicated a 5% year-on-year increase in gold demand during the third quarter of 2024. Although central banks have moderated their buying movements, the demand from Western investors in gold exchange-traded funds saw remarkable increases — doubling global investment demand to approximately 364 tons

Such trends may persist, especially if central bank demand continues to diminish in 2025, creating an opportunity for private investors to fill the gap.

Consequently, forecasts for next year's gold prices appear predominantly bullish with substantial upward potentialThe anticipated transition towards bearish markets may require a more protracted period of one to two years to materialize effectively.

Technically speaking, from monthly charts, after reaching support below the five-month moving average in November, gold found a foothold above, creating a long lower shadowThis indicates a potential caveat for previous bullish pressures, yet it also raises expectations for price peaks on the horizon; a firm judgment of market sentiment and subsequent movements will hinge on the next few monthly patternsThe trajectory in December, while bullish initially, may revert and forecast a downtrend if evidenced by subsequent movements.

Regular fluctuations below the 60-day moving average warrant attention, suggesting a predominant weak outlook should further declines persist