
Today's Recap
Gold and silver prices have remained steady, with both metals closing unchanged on December 18th. Gold (XAU) held at $4327.40, while silver (XAG) stayed flat at $565.09.
Technical Analysis - Gold (XAU)
The gold market is experiencing a brief pause in its recent upward momentum. The spot price has been stuck in a tight range between $4284.13 and $4370.67, indicating consolidation. We observe a minor rejection at the highs of this range, potentially hinting at bearish pressure.
Key support levels to monitor include:
- $4284.13 (Day Low)
- $4250.00 (psychological level)
- $4200.00 (key low from earlier 2025 rally)
Resistance levels remain:
- $4370.67 (Day High)
- $4400.00 (minor ceiling)
- $4450.00 (major hurdle)
Macro Analysis - Gold
Gold's price action is influenced by a mix of factors, including the ongoing debate on interest rates and inflation expectations. The recent stabilization in gold prices may be attributed to the Federal Reserve's cautious stance on further rate hikes. However, the looming question of whether central banks will maintain their accommodative policies or pivot towards tightening has kept markets in limbo.
A potential shift in risk appetite could drive gold higher if investors seek safe-haven assets. Conversely, a strengthening USD may curb demand for gold as an alternative to fiat currencies.
Short-term trading bias: Hold
We advise holding onto long positions in gold, but with caution due to the consolidation phase and lack of clear direction from key macroeconomic indicators.
Technical Analysis - Silver (XAG)
The silver market mirrors the gold landscape, with prices largely unchanged. The spot price is bounded between $559.44 and $570.74, indicating a narrow trading range.
Key support levels:
- $559.44 (Day Low)
- $550.00 (psychological level)
- $535.00 (key low from earlier 2025 rally)
Resistance levels remain:
- $570.74 (Day High)
- $575.00 (minor ceiling)
- $580.00 (major hurdle)
Macro Analysis - Silver
Silver's price action is more sensitive to the USD's strength and inflation expectations compared to gold. The metal has historically tracked the dollar index closely, making it vulnerable to exchange rate fluctuations.
However, silver also benefits from its industrial demand component, which remains robust despite recent economic headwinds.
Short-term trading bias: Sell
Due to the high correlation with the USD and lack of significant inflation-driven momentum, we suggest selling long positions in silver. The tight range suggests that investors may be reassessing their exposure to this metal, leading to a potential short-term decline.
Actionable Insights and Risk Management Reminders
- Investors should closely monitor interest rate decisions, central bank policies, and inflation expectations for gold and silver price movements.
- A strengthening USD could negatively impact silver prices due to its high correlation with the dollar index.
- Consolidation in both metals may be an opportunity to reassess positions and adjust trading strategies accordingly.
- It is essential to maintain a diversified portfolio and regularly review risk exposure to market fluctuations.
By staying vigilant and adjusting our analysis according to evolving market conditions, we can make informed decisions and navigate the complex landscape of precious metal markets.
By Malik Abualzait
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