Gold is in a tug-of-war, waiting for the interest rate decision!

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In the early European session on Wednesday (December 18), the US dollar index remained basically stable at around 106.97; the spot gold price is currently trading around $2,644. On this trading day, investors will focus on the Fed's interest rate decision, which is expected to trigger a major market trend. On Tuesday, the US dollar index rose as the US retail sales data was better than expected, showing basic economic momentum, which put pressure on gold prices. On the other hand, gold prices are still in a consolidation state before the Fed's decision. Expectations of a Fed rate cut support gold because lower interest rates reduce the opportunity cost of holding this non-yielding metal. However, current market conditions, including strong US economic data and inflation concerns, limit gold's upside. Investors are closely watching the Fed's policy outlook and core personal consumption expenditures (PCE) price index data for further guidance. Overall, geopolitical tensions, the prospect of interest rate cuts by most central banks around the world, Trump's tariff threats and policy uncertainty provide support for gold prices. However, the US economic data is relatively strong, and the Federal Reserve may lower its expectations for interest rate cuts next year. The US dollar and US Treasury yields tend to be strong, which puts pressure on gold prices. Investors need to pay attention to the Fed's interest rate statement and the speech of Fed Chairman Powell at the press conference, and pay attention to changes in market expectations.

​ Today, the Federal Open Market Committee (FOMC) will announce the interest rate decision and a summary of economic expectations. The market generally expects the Fed to cut interest rates by 25 basis points. Investors will pay close attention to the meeting statement and the press conference held by Fed Chairman Powell after the meeting to further judge future policy trends. The Fed's updated economic forecasts and dot plots are also the focus of the market, as they may reshape expectations for the interest rate trajectory in 2025 and 2026. After that, Fed Chairman Powell will hold a monetary policy press conference. Traders expect the Fed to cut interest rates by 25 basis points with a 99% probability. In addition, investors are betting that the Fed will cut interest rates by 100 basis points in 2025. In a low-interest rate environment, non-yielding gold tends to perform well. Traders are also watching U.S. gross domestic product (GDP) and inflation data to be released later this week for further clues. Meanwhile, Indian trade and government officials said that India's gold imports will slow sharply in December after a record high in November due to the absence of any major festivals and the rebound in prices prompting buyers to postpone purchases. In short, pay attention to the Fed's interest rate decision and the remarks of Fed Chairman Powell at the press conference. If hawkish signals are released, gold prices will be suppressed, but attention should be paid to the support of bargain hunting.

Gold technical analysis: 2720 is the medium-term gold turning point. Gold hit a high of around 2726 and then plummeted as expected. This week, the idea of ​​rebounding around the 2630 area will be seen first. At present, the market operation is basically within expectations. Gold rebounded after hitting a low of around 2633 last night and is now oscillating above 2640 again.
From the current operating structure, gold is currently in a relay correction on the way down after forming a staged high above 2720. Therefore, we need to distinguish the rhythm. The current general trend is still medium-term short, and the rebound in the 2630 area is only a rebound correction since the decline of 2720, so it can only be treated as a short-term. In the medium term, I am still bearish on gold.

Regarding the announcement of the lowest US dollar interest rate, the market generally expects that the US dollar will cut interest rates again this time. If the US dollar cuts interest rates, it will be a short-term positive for gold, and gold will have the opportunity to rebound. Therefore, this is why I suggest that the 2630 area is long instead of continuing to chase shorts this week.
At present, the view remains unchanged. Gold will continue to fall in the short term, but the short-term 2630-2620 area will be supported first. Rebound, wait for the rebound to be in place after the news lands, and then continue to arrange medium-term shorts. The strong support area below is 2640-2630, and the strong suppression area above is 2660-2670. Before the announcement of the Fed's interest rate decision, pay attention to the 2655-2630 range. For the intraday upper resistance, continue to pay attention to the 2655 area, and continue to explore the 2630 area or lower. For the support below the day, you can try to buy short around 2630. Overall, Jin Shengfu recommends buying on pullbacks and selling short on rebounds. The short-term focus on the upper resistance of 2655-2665 and the short-term focus on the lower support of 2630-2625. Friends must keep up with the pace.

sell:
2652-2655
SL: 2661
TP: 2640-2635

buy:
2628-2630
SL: 2622
TP: 2640-2650