I call of gold and silver, pushed down by profit-taking despite favorable CPI data

Thursday, December 18th, the precious metals market experienced a session characterized by contrasting dynamics. In the morning, US inflation data pleasantly surprised traders, prompting a strong upward reaction in gold and silver prices. However, during the day, a massive profit-taking activity by traders reversed the trend, closing the session with significant declines.

US CPI Data Eases Inflation Concerns

According to the Bureau of Labor Statistics, the December 2025 Consumer Price Index (CPI) shows a 2.7% annual increase, the lowest since summer. This result is well below the consensus forecast of 3.1% and also below the September reading of (3.0%). Even more relevant is the core inflation figure, which excludes food and energy components: the annual growth drops to 2.6%, the lowest level since March 2021, again below the 3.0% expectations.

Data collection was complicated by the US government shutdown, which prevented the Bureau of Labor Statistics from gathering October information. Therefore, November data remains unpublished. However, the agency announced that from September to November, the overall CPI increased by 0.2%.

Initial Positive Reaction to Data, Followed by Technical Selling

The release of CPI data immediately supported precious metals, with gold reaching its highest in two years during the session, while silver rebounded significantly. However, this initial push was later dampened by selling pressure related to traders closing long positions.

February gold futures closed the session down by $8.3 at $4,334.08 per ounce. March silver futures fell by $1.516, ending at $65.385. Despite the downward pressure from profit-taking, analysts note that the highs reached remain well above pre-data publication levels.

Implications for Federal Reserve Monetary Policy

Inflation figures provide considerable support to the “hawks” within the Federal Reserve who advocate for accelerating the rate reduction path. Expectations of rate cuts are generally favorable for precious metals and unfavorable for the dollar.

The market is now pricing in two rate cuts in 2026, with US rate futures indicating an overall easing of about 62 basis points by year-end. However, according to CME’s FedWatch tool, the probability of a cut at the January meeting remains modest at 28.8%, indicating the central bank’s initial cautious stance.

The Fed’s Position in Government Debates

The issue of Federal Reserve leadership is gaining increasing political relevance. President Trump announced he will soon name the next central bank president, preferably a candidate favoring rate reductions. Potential candidates emerging in recent days include economic advisor Kevin Hassett and former Fed Board member Kevin Warsh. According to some press sources, current Board member Christopher Waller is also in talks for the role.

Waller has stated that monetary policymakers do not see urgency in pursuing excessive easing. His assessment emphasizes that, although inflation remains above target, the Fed can proceed gradually toward a neutral rate, which he estimates to be between 50 and 100 basis points below current levels.

The US Labor Market Context

Employment data presents a mixed picture. Initial unemployment claims fall to 224,000, slightly below expectations of 225,000 and the previous 237,000. Continuing claims, however, rise to 1,897,000, below the forecast of 1,940,000 but above the previous 1,830,000. The four-week moving average shows a marginal increase, from 217,000 to 217,500.

Geopolitical Factors Support Safe-Haven Demand

Rising tensions between the United States and Venezuela have led to capital inflows into safe-haven assets, including precious metals. The evolving geopolitical landscape continues to support seeking protection through investments in gold and silver.

The dollar index shows a slight decline during the session, trading around 98.47 with daily highs near 98.56. The US currency’s weakness provides further support to precious metals prices, as it makes international investors less deterred by purchase prices.

Goldman Sachs Outlook for 2026

Goldman Sachs remains constructive on the gold outlook for the coming year. According to the bank’s research division, the bullish momentum that pushed gold futures to record highs in 2025 could continue into 2026. In the baseline scenario, Goldman Sachs forecasts a 14% appreciation of gold to $4,900 per ounce by December 2026, with potential upside risks.

The bank estimates that central banks will continue buying gold next year, averaging about 70 tons per month. These purchases are driven by ongoing geopolitical tensions and the desire to protect portfolios from volatility related to currency risks.

Short-Term Outlook

During today’s session, the most liquid gold contract fell 0.3% to $4,358 per ounce after significant gains in early trading hours. Oil prices are around $56.50 per barrel, while the benchmark 10-year US Treasury yield declined following the CPI release, settling at 4.116%.

Today’s dynamics remain indicative of a transitioning market, where favorable new economic data coexist with uncertainty regarding the timing of rate cuts and the evolution of the US economic cycle.