On Friday (December 20), in the early Asian market, spot Gold fluctuated narrowly, currently trading around 2593.38 USD/ounce. After a rebound on Thursday was hindered, the Gold price fell back, briefly rising to around 2626.33 USD/ounce earlier in the session, but closed below the 2600 mark at 2594.28 USD/ounce. US data strengthened market expectations for the Federal Reserve to adopt a cautious easing policy in the coming year, with the USD and US ten-year Treasury yields continuing to rise, which exerted pressure on the Gold price.

Data shows that US economic growth in the third quarter exceeded expectations, and the decrease in initial jobless claims also surpassed expectations.

Specifically, data shows that initial jobless claims in the US fell by 0.022 million people last week, a decrease that exceeded expectations and almost reversed the growth of the previous two weeks, suggesting the labor market is still gradually slowing. For the week ending December 7, the number of continuing jobless claims, which reflects hiring conditions, dropped by 5,000, seasonally adjusted to 1.874 million.

The US Bureau of Economic Analysis stated that the final value of the third-quarter GDP growth rate was revised up to 3.1%. The previous value was 2.8%.

Economists previously predicted that the GDP data would not be revised. The latest report shows that consumer expenditure data was revised up, and the trade deficit data was revised down, outweighing the impact of inventory accumulation data being revised down. The economic growth rate for the 4-6 month quarter was 3.0%. Federal Reserve officials believe that a GDP growth rate of around 1.8% will not lead to rising inflation.

Consumer spending, which accounts for more than two-thirds of economic activity, was revised up to a growth of 3.7%, the fastest growth rate in a year and a half, compared to the previous value of 3.5%.

Bart Melek, Head of Commodity Strategy at TD Securities, said: "These GDP data and jobless claims show that the data is quite robust," adding that a strong economy and inflation risks again prove that the Federal Reserve has no reason to be aggressive, which is traditionally unfavorable for non-yielding Gold.

The USD Index, which measures the dollar against six currencies, reached a high of 108.480 during Thursday's session, surpassing the previous trading day's 108.180, marking the highest level since November 2022; it closed on Thursday at 108.42, an increase of about 0.15%.

This week, several central banks are holding their final policy meetings for 2024. The Bank of Japan maintained its interest rates as expected, while the Bank of England also kept its rate unchanged at 4.75% on Thursday.

Vassili Serebriakov, a Forex strategist at UBS Group in New York, stated, "The main focus is on the decisions made by the central banks, which are generally favorable for the dollar. The Federal Reserve's hawkish stance on rate cuts and the Bank of Japan's dovish decision to hold steady could be the two main driving factors."

Ronald Temple, chief market strategist at Lazard in New York, said, "Since the election, US interest rate expectations have risen, but outside the USA, both the European Central Bank and most other central banks have seen a decline in rate expectations. This scenario has led to a strong dollar, as the widening interest rate gap favors the USA; therefore, I believe everyone should expect the dollar to strengthen further, since I do not think the interest rate market or the Forex market has fully absorbed the impact of tariffs."

The yield on US 10-year Treasuries reached a high of 4.594% on Thursday, the highest since the end of May, and closed up 7.6 basis points at 4.574%; it surged over 11 basis points on Wednesday.

However, Vinny Bleau, head of fixed income capital markets at Raymond James, remarked, "I think the bond market is quite volatile... I definitely believe we are a bit oversold, especially with the Personal Consumption Expenditures (PCE) price index data set to be released on Friday. Since the beginning of December, we have seen the 10-year yield rising from a low of 4.18%, and the movement seems a bit sharp. I expect a pullback... to re-test 4.30%."

According to calculations by the London Stock Exchange Group (LSEG), US Interest Rates futures pricing indicates that the USA is expected to lower rates by only 37 basis points, or one to two cuts, by 2025. The first cut is anticipated at the June meeting, with a likelihood of 65%, while the probability for a January cut is just 8.6%.

Investors are awaiting the release of core PCE data (the Fed's preferred inflation indicator) on Friday to gain further insights into the economic outlook. The market expects this Index to show a month-on-month increase of 0.2% in both overall and core PCE for November, with year-on-year increases projected at 2.5% and 2.9% respectively (previous values were 2.3% and 2.8%), and this expectation leans towards continuing to suppress Gold prices.

From a technical perspective, gold prices have closed below the 100-day moving average and the 2600 level for two consecutive days. The rebound on Thursday was hindered and fell back, indicating strong selling pressure above. The MACD and KDJ indicators are running in a dead cross, suggesting further downside risk for gold prices in the future, with an initial target looking towards the low point of 2536.68 on November 14, and a long-term target likely near the 200-day moving average, currently around 2471.97.

However, on Thursday, gold prices still recorded gains, with some bid support around 2580, suggesting a possibility of rebounding adjustments in the short term. Initial resistance above is near the 2600 level, with the 100-day moving average resistance at 2606.98; the 5-day moving average resistance is near 2614.40. A close above this level is needed to weaken the bearish signals for the future.

As of 07:53 Beijing time, spot gold is quoted at 2592.51 USD/ounce.

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