The Federal Reserve's interest rate cut hopes to be offset by profit taking? The gold bull market is still biased, and the 4400 mark is beckoning!

Gold prices fluctuated narrowly in the Asian market on Friday (December 19). After the spot gold fell to around $4,310, it has now rebounded to around $4,327, mainly affected by profit-taking and bargain buying. US CPI inflation unexpectedly cooled to 2.7% in November, strengthening the expectation of further interest rate cuts by the Federal Reserve, limiting the downside of gold prices. At the same time, geopolitical tensions and strong demand in the US Commission provided support for gold. Traders will take more clues from the University of Michigan Consumer Confidence Index for December, which will be released later on Friday.

Daily Digest Market Dynamics: Gold Falls Despite Federal Reserve Interest Rate Cut Expectations

According to data from the Bureau of Labor Statistics (BLS) on Thursday, U.S. CPI inflation fell to 2.7% in November, below market expectations of 3.1%.

The core CPI, which excludes volatile food and energy prices, rose 2.6 percent, below analysts' expectations of a 3.0 percent increase.

Sal Guatieri, senior economist at BMO Capital Markets, said: "The unexpectedly large drop in US consumer price inflation should pave the way for further Fed easing in 2026."

President Donald Trump said on Wednesday that the next Federal Reserve chairperson would be someone who believes in a big cut in interest rates, adding that a successor to current Fed chairperson Jerome Powell would be announced soon.

After cutting rates by 25 basis points at each of the Fed's last three meetings, financial marekt is currently pricing in only a 26.6% probability that the Fed will cut rates at its next meeting in January, according to the CME FedWatch tool.

Venezuela's government has ordered its navy to escort ships carrying oil products from its ports, The New York Times reported on Thursday, in a move that could heighten the risk of confrontation with the US after Mr. Trump ordered a "blockade" of the country's oil industry.

In terms of the situation in Russia and Ukraine, ahead of a meeting between US and Russian officials this weekend, US President Donald Trump said he believes talks to end the Russian-Ukrainian conflict "are getting closer to some kind of outcome". A White House official said Trump envoys Witkov and Kushner are scheduled to meet with a Russian delegation in Miami this weekend and they will continue their efforts to reach an agreement between Russia and Ukraine to end the conflict. Analysts pointed out that if talks progress over the weekend, gold prices will face the possibility of opening sharply lower next week.

Gold remains bullish and ready to retest record highs

According to the daily chart, the positive outlook for precious metals remains intact as prices form higher highs and lows and hold steady above the key 100-period exponential moving average. In addition, the Bollinger Bands widened and tilted upward, with the 14-day Relative Strength Index (RSI) above the midline, indicating that the path of least resistance is up.

Gold's first hurdle to the upside came at Friday's high of $4,353, a level that could signal buyers are ready to step in and push prices back to an all-time high of $4,381 with a further psychological target of $4,400.

On the contrary, if there is a bearish K-line and the price falls below the December 17 low of $4,300, sellers may gain momentum to pull gold below the December 16 low of $4,271. The next support level to watch is the Bollinger Line mid-rail at $4,225.

(Daily chart of spot gold, source: Internet)

At 13:52 Beijing time, spot gold was trading at $4,328.12 per ounce.