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Gold Futures Hit the Highest Price in 3 Weeks; Pay Attention to US PPI


The U.S. dollar index rose on Monday (December 13). Later this week, the Federal Reserve and several other major central banks will hold a meeting; investors expect that the Federal Reserve will announce the end of bond purchase plans sooner than expected, and the market is also looking for information about the increase in next year. Clues to the timing. Gold futures prices climbed and hit the highest closing price in three weeks, but before the Fed meeting this week, the price of gold remained in a narrow trading range. The outcome of the Fed meeting may determine the bullish or bearish momentum of the precious metals market. Oil prices fluctuated and fell. On the one hand, traders were weighing the impact of the omicron strain. At the same time, OPEC raised its forecast for global crude oil demand.

Boosted by investor concerns about rising inflation and the epidemic, spot gold rose slightly on Monday, closing at $1,786.66 per ounce, the highest closing price in three weeks; however, the strengthening of the U.S. dollar made gold more expensive for overseas buyers. It broke the recent 1760-1795 US dollar range.

Bob Haberkorn, senior market strategist at RJO Futures, said that trading in the gold market today is quite quiet, and the market is waiting for the Federal Open Market Committee (FOMC) meeting to see what central banks think about inflation and interest rates. No one expects the central bank to raise interest rates this week, which provides some support for gold prices. Unless the Fed announces an immediate interest rate hike next quarter, the price of gold may rise above $1,800 by the end of the year.

Michael Hewson, chief market analyst at CMC Markets UK, pointed out that in the short to medium term, gold prices will hover around near-term levels until we understand how fast the Fed will accelerate the reduction of debt purchases, and whether their policy statements will be particularly hawkish. Commerzbank said in a report that as central banks begin to enter an interest rate hike cycle, the trend of gold prices in the first half of 2022 may be sluggish. The bank predicts that the price of gold will reach US$1,900 per ounce by the end of 2022, which is about US$200 lower than previous expectations.

In terms of fundamentals, the price of gold fluctuated sideways continuously, but the situation is expected to usher in an improvement this week. Today, the US November PPI will be announced. On Wednesday, there will be “terrorist data” on retail sales and the Federal Reserve interest rate decision. On Thursday, there will be the Bank of England and the European Central Bank interest rate decision. The market generally believes that the Fed has a high probability of accelerating the reduction of debt purchases. Therefore, the focus of the resolution is mainly on the Fed's expectation of interest rate hikes next year, which determines the prospect of gold price trends. Before the interest rate decision, the price of gold may gain a foothold above 1780, because the demand for anti-inflation is still strong. In terms of operation, it is recommended that conservatives wait and see for the time being, and radicals can do more at a low level.

The upper resistance focuses on the high of 1793.15 on December 8, and further attention to the psychological barrier of 1800.00 and the high of 1808.72 on November 30.

The initial support below focuses on the low of 1778.70 on November 24, and further attention on the low of 1772.21 on December 10 and the low of 1761.97 on December 2.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

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