Data released last Friday showed mixed results for US personal consumption expenditures, with core inflation easing and spending slipping slightly. The market broadly expects the Fed to cut rates again this week, pressuring the dollar toward a one-month low and providing support for non-yielding gold.

Breakdown data showed US personal income rose 0.4% MoM in September, in line with expectations; personal spending rose 0.3%, slightly below the consensus forecast of 0.4%. Both figures indicate consumer demand remains solid but is gradually slowing.

Inflation data were broadly stable. Headline PCE rose 0.3% MoM, with the YoY rate holding at 2.8%, slightly above August’s 2.7% and exactly in line with expectations.

Core PCE rose 0.2% MoM, while the YoY measure slowed from 2.9% to 2.8%, below expectations for no change. The decline in core PCE is a modest but welcome sign for policymakers looking for continued disinflation.

Market Watch: US consumer spending and income growth both slowed in September, closing out an otherwise strong third quarter. Real spending grew at an annualized 2.7% pace in Q3, slightly above Q2’s 2.5%. However, the weaker September performance—combined with recent declines in consumer sentiment and softening labor-market indicators—suggests that Q4 spending growth may slow to below 1%.

Although the Fed’s preferred inflation gauge remains above target, it has not re-accelerated over the past five months and has stayed relatively stable. Slower consumption growth and steady inflation should boost the Fed’s confidence, reinforcing the case for another 25-basis-point rate cut at Wednesday’s meeting.

Gold’s sharp pullback after testing 4,260 last Friday was in line with expectations. However, the lack of follow-through selling since the start of Monday’s Asian session suggests the decline was a one-off event rather than a full reversal of the upward trend.

The key support level for gold is now at 4,175. A sustained break below this level could trigger technical selling and increase the likelihood of a decline toward the 4,164–4,150 zone, or even below 4,100. The latter corresponds to a short-term uptrend line from late October; a confirmed break would be viewed as a new trigger for bearish traders and could push gold further downward.

On the other hand, the 4,250–4,260 region may continue to act as strong immediate resistance. If gold breaks and holds above this area, the next significant resistance would appear near 4,277–4,290, followed by a potential move toward the 4,300 round-number level. Renewed buying beyond that point would be interpreted as a key bullish signal and could pave the way for a sustained continuation of the uptrend since the late-November lows.

Trade Direction: Buy

Entry Price: 4170

Target Price: 4350

Stop Loss: 4145

Valid Until: December 24, 2025 23:55:00

Support: 4190 / 4178 / 4173

Resistance: 4245 / 4260 / 4265

Gold prices kicked off the week on a subdued note, with market participants showing little appetite for large directional bets ahead of what is widely viewed as one of the most consequential Federal Reserve decisions of the year. The yellow metal, which has spent much of the past week oscillating within a narrow range, was last seen trading around $4,205 per ounce, reflecting a cautious tone across global markets.

The Federal Reserve will deliver its final policy announcement of 2025 on Wednesday, and expectations are running high that the central bank will implement another interest rate cut, bringing the Federal Funds Rate into the 3.50%–3.75% range. Such a move would mark another step in the Fed’s gradual shift away from the restrictive stance that defined much of the past two years.

However, recent economic data is complicating the narrative. The latest Personal Consumption Expenditures (PCE) report—closely watched as the Fed’s preferred inflation gauge—showed that price pressures are cooling but not at a pace that would justify unlimited easing. At the same time, labor market indicators have pointed to uneven hiring momentum, leaving policymakers with a more delicate balancing act as they prepare the 2026 policy outlook.

These mixed signals have prompted traders to scale back expectations of aggressive rate cuts next year. As a result, the US Dollar has stabilized, snapping its two-week slide, while Treasury yields have pushed modestly higher, further limiting gold’s upside momentum in the near term.

From my perspective as a financial reporter, the market appears to be entering a phase where every incremental data point—not just from the inflation front but also from wage growth and consumer spending—will matter more than usual. The Fed can only cut so far without undermining credibility, and traders seem increasingly aware that the path toward lower rates in 2026 will not be linear. This environment of uncertainty is helping gold maintain support, even if the immediate upside remains constrained.

Beyond monetary policy, geopolitical tensions continue to lend a supportive undercurrent to the precious metal. The ongoing Russia–Ukraine conflict, which shows no signs of meaningful de-escalation, remains a source of global macro instability. Meanwhile, renewed friction between Thailand and Cambodia has layered an additional risk premium into safe-haven assets, subtly reinforcing gold’s resilience.

From a chart-based perspective, gold is currently testing a major inflection zone around $4,206, an area that has historically produced notable reversals and breakouts. Price action across multiple timeframes suggests that the metal is coiling, with intraday wicks and tightening ranges pointing to a buildup of directional pressure.

A confirmed rebound from this zone would likely pave the way toward the next upside target at $4,250.96, a level aligned with previous local highs and minor structural resistance. Conversely, a clean breakdown of the zone could expose the market to deeper retracements, particularly if the Fed decision surprises with a more hawkish tone.

BUY GOLD

ENTRY PRICE: 4200

STOP LOSS: 4170

TAKE PROFIT: 4250

AUD/USD traded firmly around 0.6640 on Monday, pausing after a four-day winning streak that propelled the pair to its highest level in nearly two months. The Australian Dollar’s consolidation comes at a crucial moment for global FX markets, with investors positioning cautiously ahead of Tuesday’s Reserve Bank of Australia (RBA) policy decision and Wednesday’s Federal Reserve announcement, a combination that could reshape near-term currency dynamics.

The Australian Dollar has been buoyed by a meaningful shift in monetary-policy expectations. Only weeks ago, markets had priced in the risk of additional RBA rate cuts. But stubborn inflation has effectively wiped out those expectations. Australia’s Q3 CPI rose 3.2% YoY, surging from 2.1% in Q2, underscoring that price pressures remain entrenched across services, rents, and energy components. The sticky nature of inflation has convinced traders that the RBA is unlikely to ease further — and may even need to consider tightening again over the medium term.

For now, consensus overwhelmingly expects policymakers to keep the Cash Rate unchanged at 3.60%, but traders acknowledge that the tone of the RBA’s statement may be far more consequential than the decision itself. A guidance shift — even subtle — could fuel another leg higher in the AUD if the central bank signals a stronger commitment to managing inflation risks without leaning toward cuts in early 2025.

Some analysts have taken this idea further. With household spending accelerating 1.3% in October, far above September’s 0.3%, a growing segment of the market is starting to pencil in the possibility of an RBA hike as early as 2026 if inflation fails to moderate. Yet not everyone is convinced. Analysts at Commerzbank warn that “despite a higher-than-expected inflation print in November, the RBA is unlikely to signal any imminent rate hikes,” a stance that could undermine the Aussie if policymakers sound overly cautious.

China’s improving economic pulse is adding another layer of support for the AUD, given the currency’s close sensitivity to Chinese demand. The National Bureau of Statistics reported a blockbuster $111.68 billion trade surplus for November, driven by an impressive 5.7% rebound in exports after October’s contraction. For resource-heavy Australia, stronger Chinese trade figures are typically bullish — and the market reaction this week has been no exception.

Meanwhile, the US Dollar remains on the defensive ahead of the Fed’s policy decision. The CME FedWatch Tool assigns an 87% probability to a 25 bp rate cut, which would bring the Fed Funds target range down to 3.50–3.75%. The mood has been shaped by accumulating evidence of a cooling labor market, including a decline in job openings and softer wage pressures. The US Dollar Index (DXY) slipped toward 98.90, a five-week low, as traders brace for what could be a pivotal week for global rates.

Recent remarks from New York Fed President John Williams emphasized weakening labor demand and a softer economic backdrop, reinforcing dovish expectations. However, investors remain wary of a potential surprise from Chair Jerome Powell. A more cautious tone — especially if the Fed signals discomfort with front-loaded easing expectations for 2026 — could slow the USD selloff and cap AUD gains.

AUD/USD’s multi-day advance has pushed the pair firmly into a bullish technical structure on the intraday and short-term charts. Price action remains supported by a steep ascending trendline, with the pair consistently trading above the 50-period EMA, reinforcing the broader upward bias.

However, momentum indicators suggest that the rally may be losing a bit of steam in the immediate term. Relative Strength Index (RSI) readings have entered or approached overbought territory, generating early negative signals that could slow the pace of further appreciation.

A near-term pullback toward 0.6610–0.6625 cannot be ruled out, particularly if the RBA strikes a less hawkish tone than traders expect. Still, the broader trend remains constructive as long as AUD/USD holds above key support levels. A decisive move above 0.6680 would open the door toward 0.6730, while a break below 0.6580 would reduce bullish momentum and expose the pair to deeper consolidation.

BUY AUDUSD

ENTRY PRICE: 0.6640

STOP LOSS: 0.6600

TAKE PROFIT: 0.6730

The Japanese government has recently finalized a supplementary budget of JPY18.3 trillion to support new stimulus measures, primarily financed through issuance of new government bonds. Prime Minister Sanae Takaichi has indicated a departure from prioritizing fiscal balance targets such as the primary fiscal balance to enhance fiscal flexibility and plans to establish new multi-year fiscal objectives. Although the government initially projected primary fiscal surpluses for fiscal years 2025 to 2026, these targets are now under reassessment. Against the backdrop of the Bank of Japan (BOJ) gradually withdrawing from an extended ultra-loose monetary policy and rising borrowing costs, fiscal consolidation is widely regarded as an urgent priority. The IMF has also expressed support for the BOJ's recent monetary policy decisions, asserting that an accommodative stance remains appropriate. Meanwhile, domestic economic data is adding complexity to policy deliberations, with recent government reports indicating a 3.0% YoY decline in household consumption in October—the steepest in nearly two years and significantly below market expectations; seasonally adjusted, consumption contracted by 3.5% MoM, also notably below forecasts. Declines in food, entertainment, and automotive expenditures are primary drag factors, though authorities still consider overall consumption recovery trajectory intact and are uncertain whether the recent downturn is sustainable. Weak consumer spending heightens sensitivity over the BOJ's December rate hike decision, while persistent high inflation and yen depreciation are prompting some policymakers to favor earlier tightening. Analysts suggest that despite December rate hike being broadly anticipated, subdued consumption may constrain the pace of subsequent increases, while weakening growth expectations could further pressure the yen following any rate hikes.

The U.S. dollar exhibited cautious trading ahead of the Federal Reserve's monetary policy statement scheduled for Wednesday. Market consensus anticipates a 25 basis point interest rate cut to a range of 3.50%-3.75%, driven by ongoing deterioration in the labor market conditions. Recent data from the U.S. Department of Commerce indicate that September consumer spending experienced a modest 0.3% increase following three consecutive months of robust growth, signaling a slowdown in economic momentum toward the end of the third quarter. Elevated living costs coupled with a fragile labor market have suppressed demand. The report also highlights that, due to comprehensive tariffs imposed on imports by the Trump administration, annualized inflation in September reached its fastest pace in nearly one and a half years. Consumer expenditure accounts for over two-thirds of U.S. economic activity, with the 0.3% growth slightly below the revised 0.5% for August, aligning with economists' expectations from a Reuters survey. The release was delayed due to the 43-day government shutdown. Gains in spending were primarily driven by energy commodities, particularly gasoline, while expenditures on durable goods such as automobiles and entertainment products declined. Clothing and footwear expenditure decreased, resulting in flat overall goods spending. Service sector expenditure increased by 0.4%, mainly supported by housing and utilities, with sectors such as healthcare, financial services, insurance, hospitality, and transportation also experiencing growth.

In the 1D timeframe, the Bollinger Bands are converging with narrowing bands, while SMAs are flattening, indicating a potential trend reversal. The price has persisted near the middle band of the Bollinger envelope for three consecutive days, accompanied by lower shadows, signaling effective support levels. Following a MACD death cross, the MACD line and signal line are currently retracing toward the zero-axis, suggesting that the correction phase has not yet concluded. The RSI stands at 51, reflecting strong market neutrality. As long as the price remains above the middle Bollinger band, there is a high probability of a bullish breakout toward the upper band and key psychological levels around 157.6 and 160. In the 4H timeframe, Bollinger Bands are tightening, with SMAs flattening. After the MACD generated a golden cross, the MACD line and signal line are pulling back toward the zero-axis. Despite new lows, downside momentum is waning, indicating a bullish divergence. The RSI is at 47, suggesting cautious market sentiment. A confirmed move above the middle Bollinger band could lead to an upward rally toward the upper band near 156. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 155.2

Target Price: 158.8

Stop Loss: 153.5

Support: 154.7, 153.2, 150

Resistance: 157, 158.8, 160

Amid a rapid escalation in security and diplomatic friction, Japanese media and officials have accused PLA aircraft of locking fire-control radar on JSDF planes near Okinawa, prompting an equally forceful riposte from Beijing. The string of incidents is feeding market anxiety over regional stability and the safety of Japan-based assets. Contrary to the historical "geopolitical shock → yen safe-haven rally" reflex, investors are now pricing a "capital-flight risk + waning confidence in Japan's economic and asset security" narrative, which is exerting sustained downward pressure on JPY.

This psychological logic is driven by two core forces. First, capital is reassessing the risk premium on JPY/JGBs. As geopolitical tensions persist, international investors demand a higher risk premium on Japanese assets, prompting multinational funds to trim JPY exposures and redeploy into USD and alternative-currency assets. Once these outflows become a sustained rotation, the expanded supply and reduced demand for yen exert natural downward pressure. Second, markets are pricing in heightened uncertainty over Japan's domestic growth outlook and the credibility of its inflation-cum-fiscal anchor. Should the conflict disrupt trade, export receipts, or FDI inflows, the expected macro-volatility further erodes the yen's store-of-value appeal.

Meanwhile, the dollar is drawing liquidity away from the yen, buoyed by its reserve-currency status, safe-haven appeal and the still-competitive real yields on offer in the U.S. Treasury market. Even in the absence of a material Fed pivot, USDJPY can stay bid as long as cross-border flows continue to favour the depth and safety of USD-denominated assets. In other words, when geopolitical risk collides with portfolio-flow risk, the traditional "risk-off JPY bid" can reverse. The market has already priced in this dual structure of a "capital-inflow premium plus safety premium," providing a durable underpinning for a weaker yen and a stronger USDJPY.

USDJPY has broken out of the symmetrical-triangle consolidation and the underlying bias remains bullish. Although the pair has been pulling back recently, the last few sessions have produced consecutive long-lower-shadow candles. Friday's close formed a textbook hammer, an explicit reversal signal, indicating that short-term buying momentum has strengthened and the uptrend is likely to resume.

Immediate resistance is eyed at 155.90-156.00. A decisive break and daily close above 156.00 would open extension room toward 158.00, with scope to challenge the psychological 160.00 handle.

Trade Direction: Buy

Entry Price: 155.20

Target Price: 160.10

Stop Loss: 154.30

Valid Until: December, 22, 2025, 23:00:00

Support: 154.90/154.34

Resistance Levels: 155.92/160.00

With Chancellor Rachel Reeves formally unveiling the budget, previous market anxiety over fiscal policy uncertainty has significantly eased, and the suppression of risk appetite caused by that uncertainty has been fully lifted. Against this backdrop, GBP/USD extended its recent strength last week, demonstrating robust market resilience. From a support perspective, positive changes in domestic fundamentals form the core underpinning. On one hand, the UK budget passed the first round of stress tests in the bond market smoothly, markedly cooling investor concerns about UK fiscal sustainability, effectively stabilizing cross-border capital flows, and providing fundamental support for sterling. On the other hand, Wednesday's upward revision of the final November Composite PMI showed marginal improvement in both UK services and manufacturing sectors, dispelling market fears of stagflation and further strengthening fundamental support for the exchange rate. Regarding the external environment, growing expectations for a Fed rate cut at this week's meeting dampened the USDX, offering reverse impetus for GBP/USD gains. Market analysis generally believes that the pound's recent strength partly stems from a "short squeeze" effect — speculative traders who had bet on pound weakness were forced to cover positions as the currency continued rising, amplifying short-term upward momentum. Looking ahead, the trading logic for GBP/USD will center on policy divergence between the BoE and the Fed: markets widely expect the Bank of England to lower its benchmark rate by 25 basis points at the December meeting, which may exert temporary downward pressure on sterling. However, expectations for the Fed to begin a rate-cutting cycle are equally strong, making the dollar's weak trend difficult to reverse in the near term, thus continuously providing reverse support for the pound. The interplay of these two forces will dominate the exchange rate's future trajectory.

As markets anticipate another Fed rate cut this week, the dollar is hovering near its lowest level since late October, making it a key driver of GBP/USD's continued strength. Traders see nearly a 90% probability of a Fed rate cut at next week's meeting, with expectations of possibly two more cuts next year. This view is backed collectively by top investment banks, including Morgan Stanley, JPMorgan Chase, and Bank of America, all of which recently revised their Fed December policy outlook from 'hold steady" to "cut by 25 bps." Recent U.S. labor market data showing some softness has further reinforced rate-cut expectations. On Friday, the early-December U.S. consumer confidence index improved marginally, and September core PCE inflation met market forecasts. Nevertheless, such fundamental data failed to reverse dollar weakness, as market attention is now fully focused on the Fed's monetary policy outlook. Moreover, potential leadership changes at the Fed have added dovish speculation: White House economic adviser Kevin Hassett is seen as a leading candidate to succeed current Chair Powell, and his relatively accommodative policy leanings have sparked expectations of adjustments to the Fed's long-term framework. With near-term rate-cut expectations already heavily priced in, this marginal shift in longer-term policy orientation has further intensified downward pressure on the dollar.

Based on the four-hour chart, GBP/USD is rising strongly along EMA12, but the MACD and signal lines have formed a death cross. Although they are returning near the zero axis, there is some distance away, indicating the adjustment phase is not yet over. Bollinger Bands are beginning to narrow, moving averages are flattening, and a pullback toward the Bollinger Middle Band and EMA50 is likely, targeting around 1.33 and 1.327. Besides, the RSI stands at 59, reflecting bullish sentiment. On the one-hour chart, price highs are gradually declining, signaling a short-term downtrend. Moreover, the MACD's upward momentum is weakening, suggesting a probable decline toward the Bollinger Lower Band and EMA200. RSI is at 45, showing pessimistic sentiment, and its peaks are also falling. Therefore, selling at highs remains the key strategy.

Trading direction: Sell

Entry price: 1.3332

Target price: 1.29

Stop loss: 1.35

Support: 1.3/1.29/1.28

Resistance: 1.34/1.342/1.35