Opportunity or risk?

December promises to be a challenging month for the gold market due to significant volatility stemming from inflation, the US labor market, and the new policies of President-elect Donald Trump.

December was a challenging month for the gold market.

The gold market has been experiencing significant volatility in recent weeks, and this trend is unlikely to end anytime soon. December promises to be a challenging month for investors.

Although gold prices have held a crucial support level at $2,600 per ounce, the market is currently highly vulnerable. Investors are awaiting new information before making decisions. The current situation is like "finding a needle in a haystack"—unpredictable, as Federal Reserve Chairman Jerome Powell aptly put it at the 2023 Jackson Hole conference.

The December gold market will be challenging for investors. (Image: Kitco News)

The US economy is currently in a "just right" state: neither too hot nor too cold. This makes it difficult to predict the direction of gold, which is considered a safe-haven asset and a hedge against inflation.

Meanwhile, inflation remains high. The core personal consumption expenditures (PCE) index, the Fed's preferred measure of inflation, rose 2.8% over the past 12 months, well above its 2% target. This level of inflation is still not high enough to force the Fed to cut interest rates (a positive signal for gold), but it is also not clear enough to make accurate predictions.

On the other hand, the US labor market situation will be a key factor. If the non- farm payroll figures released next week are positive, the market may expect a shorter monetary easing cycle. Conversely, if the data is disappointing, the price of gold could rise sharply. This unpredictability is the reason for the significant volatility in the market.

Besides the US economic situation and interest rates, geopolitical factors are also causing instability. Statements by President-elect Donald Trump on social media could easily spark a new trade war, drive up inflation, and slow economic growth.

Although difficult to predict, this significant volatility creates opportunities for investors who missed the previous price surge to buy gold. Kitco expert Neils Christensen suggests that those who have invested in gold and benefited from the price increase this year should calmly monitor market developments.

Will gold rise or fall in the short term?

This week, 14 analysts participated in Kitco News' gold survey, showing that 6 experts (43%) predicted gold prices would rise next week, while 7 analysts (50%) forecast prices would remain flat. Only 1 expert (7%) predicted gold prices would fall.

Meanwhile, Kitco's online poll, which garnered 199 votes, shows that public sentiment has also become more cautious after witnessing the week's gold price movements. 96 retail investors (48%) expect gold prices to rise next week, while 61 (31%) predict a decline. The remaining 42 investors (21%) believe gold will remain stable in the short term.

Employment data will dominate next week's economic calendar, with the Jobless Operations Report (JOLTS) on Tuesday, the ADP employment report on Wednesday, weekly jobless claims on Thursday, and the non-farm payrolls report on Friday.

The market will also be paying attention to the ISM manufacturing and services PMI, released on Monday and Wednesday, respectively, along with the University of Michigan's preliminary consumer sentiment index on Friday.

Wednesday was also one of the last opportunities to hear Federal Reserve Chairman Jerome Powell speak before a period of "silence" as he participated in a discussion at the New York Times' DealBook Summit.

Mark Leibovit, publisher of VR Metals/Resource Letter, said he is temporarily not investing in gold. He said, " The rally ended last Friday and I was wrong to predict that prices would continue to rise. Right now, I'm waiting for new signals before re-investing ."

Meanwhile, Adam Button, Head of Currency Strategy at Forexlive.com, is trying to analyze signals from Mr. Trump and their impact on the USD and gold prices. He says: "Donald Trump wants four things: 3% GDP growth, a reduction in the budget deficit to around 3% from 7%, a significant reduction in the trade deficit, and a higher stock market. Those are Donald Trump's four economic priorities. He can't achieve those things with tariffs ."

Adam Button points out that the key to achieving the four priorities is weakening the US dollar, which benefits gold. In the short term, Button says he is confident in gold's seasonal trend. He stated: " Gold's seasonal strength in December and January was the best of any market. Its performance during that time was phenomenal. Next month is also very good for riskier trades, and I think it could contribute to a weakening US dollar and a strengthening gold ."

Regarding the non-farm payrolls report, Button stated: " The Fed will have a difficult time processing the November jobs figures because of the downturn caused by the hurricane and the hiring and spending ahead of the election. I wouldn't underestimate the non-farm payrolls report ."

Analysts at CPM Group recommend buying gold at current prices, predicting it will reach $2,700 by December 11th. According to CPM Group, the earlier drop in gold prices this week was due to reduced tensions in the Middle East and market expectations that Scott Bessent, Trump's nominee for Treasury Secretary, would implement a more lenient tariff policy. While Bessent's appointment has eased concerns about inflation and recession caused by tariffs, these risks remain.

In a similar view, veteran Kitco analyst Jim Wyckoff also believes that gold will maintain its upward momentum and continue to rise in price next week due to increased demand for safe-haven assets.

Source: https://congthuong.vn/chuyen-gia-du-doan-thi-truong-vang-thang-12-co-hoi-hay-rui-ro-361755.html