Looking to the Futures

Gold prices plummeted yesterday following all time highs last week. Profit taking and reported progress on a Ukraine peace deal could be significant catalysts in the downside move. The summary of the Bank of Japan meeting on December 19^th has also caused concern for precious metals. In the bull camp the dollar gave up early gains yesterday after US economic data came in mixed. Markets are expecting additional cuts to the Fed Funds rate in 2026 which has been supportive for precious metals. Central bank demand for gold remains strong and geopolitical concerns could provide additional support for gold prices. 

Long liquidations caused gold prices to fall yesterday following record highs during the last week of 2025. On Sunday, President Trump and Ukrainian President Volodymyr Zelenskyy reported progress in their peace talks. The United States is offering Ukraine security guarantees for 15 years as part of the proposed peace plan; however, President Zelenskyy has stated he would like a significantly longer guarantee. President Trump stated that Ukraine and Russia are "closer than ever before" to a peace settlement. 

In the bull camp for precious metals the Bank of Japan released the summary of the December 19^th meeting, which noted that some policymakers feel Japan's real interest rate remains very low. This would indicate that additional rate increases are likely in 2026.

The dollar index fell slightly yesterday after opening higher. The Dec Dallas Fed manufacturing outlook of general business activity unexpectedly fell -0.5 to -10.9 against expectations of an increase to -6.0. US Nov pending home sales increased +3.3% m/m, beating the expected +0.9% m/m rise. Expectations show interest rate cuts of -50 bp in 2026 from the FOMC, putting additional pressure on the dollar. President Trump is expected to announce his selection for the new Fed Chair in early 2026 and the appointee is expected to take a more dovish approach to monetary policy. According to Bloomberg, National Economic Council Director Kevin Hassett is the likely choice as the next Fed Chair. 

Central bank demand for precious metals remains strong with China's PBOC reserves increasing +30,000 ounces to 74.1 million troy ounces in November. The World Gold Council has reported that global central banks purchased 220 MT of gold in Q3, an increase of +28% from Q2.

Safe haven demand for precious metals is also supportive for gold prices with the US continuing its blockade of sanctioned oil tankers connected with Venezuela and a military attack on ISIS targets in Nigeria last week.

 Looking at the daily chart for the Gold Futures February 2025 (/GCG26) contract we can see the significant selloff on higher than average volume during Monday’s session. The contract tested the 20-Day Simple Moving Average but was able to close slightly above that level. 

The Daily Technical Summary from Hightower Research shows support levels at 4528.8 and 4490.4 with resistance levels at 4594.7 and 4622.4. Both support levels were broken during yesterday’s trading. 

According to the CFTC Commitment of Traders report released December 16^th, managed money traders increased their long position by +9,490 contracts and increased their short position by +442 contracts. Managed money traders are net long 132,596 contracts as of the time the report was published. 

The 14-Day Relative Strength Index at 53.09% indicates slightly more buyers than sellers but the contract is not in overbought territory. 

20-Day SMA                   4,335.4

50-Day SMA                   4,209.6

200-Day SMA                 3,672.0

14-Day RSI                     53.09%

Implied Volatility            22.33%

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