Gold market analysis

"Gold Price Forms a Large Double Top, Future Outlook Worrying" 19/12/2025 10:23 Completed 

Yesterday, the United States released data showing that the year-on-year increase in the CPI in November slowed sharply by 0.3 percentage points to 2.7%, and the year-on-year increase in core CPI also dropped sharply by 0.4 percentage points to 2.6%. Investors may think this reflects a rapid slowdown in US inflation, increasing the chances of further interest rate cuts by the Federal Reserve. In fact, the sharp drop in the CPI increase in November was to some extent affected by the earlier shutdown. The US Department of Labor pointed out that due to the shutdown, it was unable to collect data for October, and some of the indices used for calculation relied on non-survey data sources. Survey data only resumed on November 14th. Therefore, I believe that the CPI in December will be closer to the actual situation. Especially considering the Thanksgiving effect in November, even if the CPI increase was not significant, it should not have dropped sharply. 

Yesterday, the volatility of gold prices intensified. I believe that many investors suffered losses, mainly because they suddenly expanded their risk appetite several times over, setting stop-loss levels far from the market price after seeing the potential for gold prices to reach new historical highs. Affected by the sharp drop in the US November CPI increase, the spot gold price fluctuated significantly in the early morning of New York and then continued to rise. It reached a high of $4,374.37 in London, very close to the historical high of $4,381. However, it then dropped rapidly and hit a low of $4,309.52 this morning before gradually recovering. This formed a double bottom with the low of $4,309.23 in the early morning of New York yesterday. 

The chance of a break below 4,300 increases significantly. 

First, from a broad perspective, the gold price approached the historical high but failed to break through, instead experiencing a significant decline, forming a large double top on the daily chart. Additionally, from the hourly chart, the gold price dropped sharply after the London market closed, causing the candlesticks to show a double-line decline and a bearish signal. Moreover, the bottom of the large bullish candle on Wednesday was breached twice, although it eventually closed above it. This indicates that the support level of $4,315.29 is no longer strong. Furthermore, the gold price has now fallen below the 20SMA ($4,318) and the 50SMA ($4,310.5). Based on this, the probability of a major correction in the gold price has significantly increased. The $4,300 level is almost certain to be breached, and $4,000 will be the medium-term target for a test. In the short term, it is expected that the gold price will fluctuate below $4,335 within the day and is highly likely to test $4,260. If this level is breached, the gold price is likely to further test the lower-level Gann strong support level of $4,210 in the future. 

The above content is for reference only and does not constitute investment advice.