Market Overview

The US dollar experienced heightened volatility on Thursday following the release of US November Consumer Price Index (CPI) data, which came in significantly below market expectations. This softer inflation reading reignited hopes among investors that the Federal Reserve could embark on a series of interest rate cuts in 2026 to support economic growth. In response, the dollar index initially plunged sharply, falling to approximately 98 — levels not seen in several weeks. However, as the trading day progressed, the dollar regained much of its losses, closing marginally higher by 0.06% at 98.44.

Treasury yields, which had fallen sharply on the inflation news reflecting expectations for easier monetary policy, stabilized somewhat by the close. The 10-year Treasury yield dropped to 4.125%, while the 2-year yield, closely aligned with near-term Fed policy expectations, ended at 3.473%. This yield behavior highlights the tension between market optimism for rate cuts and ongoing concerns about inflation persistence.

Gold and Precious Metals

Gold prices surged to their highest levels in nearly two months, touching $4,374 per ounce during intraday trading. This rally was driven by a combination of factors: the subdued inflation reading reducing bond yields and real interest rates, expectations of Fed rate cuts, and ongoing geopolitical risks, particularly heightened tensions involving Venezuela’s oil blockade and uncertainty surrounding the Russia-Ukraine conflict.

Despite the strong intraday gains, gold prices gave back much of the advance by the close, settling near $4,330 per ounce. This pullback was influenced by profit-taking among traders and a diminished immediate inflation hedge appeal due to the softer CPI figures. Technical indicators show gold remains in a strong long-term uptrend, trading above key moving averages with bullish momentum. However, the Relative Strength Index (RSI) is signaling overbought conditions, implying a potential short-term consolidation or minor correction before the next leg higher.

Silver and platinum also saw strong upward pressure, with silver briefly surpassing $66 per ounce, reaching historic highs, and platinum hitting its highest levels in over 17 years, supported by safe-haven demand and supply concerns.

Crude Oil Market

Oil prices declined on Thursday despite ongoing geopolitical risks, reflecting a complex balance between supply concerns and demand worries. The US administration’s blockade of sanctioned Venezuelan oil tankers and renewed scrutiny of Russian energy exports created a temporary risk premium, supporting prices. However, the broader market remains weighed down by expectations of a significant global oil surplus in 2026, combined with signs of weakening demand, particularly from China.

WTI crude oil closed down 1.48% at $55.80 per barrel, and Brent crude oil also fell by the same percentage to close at $59.89 per barrel. The market’s overall bearish sentiment is driven by forecasts from the International Energy Agency (IEA) projecting a surplus of approximately 4 million barrels per day next year, coupled with OPEC+ plans to pause production hikes while gradually restoring supply levels. These dynamics keep prices pressured, with geopolitical factors providing only short-lived support.

Currency Market Technical Analysis

NZD/USD
The New Zealand dollar continues to show resilience, holding firmly above the 0.5680 support level despite slowing momentum. Technical indicators such as the Relative Strength Index (RSI) and MACD confirm bullish momentum, but the narrowing Bollinger Bands and shrinking MACD histogram suggest momentum is moderating. The pair is consolidating near recent recovery highs but remains capped by a longer-term bearish trend reflected by its position below the 100 and 200-day exponential moving averages (EMAs). A decisive breakout above 0.5840 would open the door toward 0.5990, but until then, the broader outlook remains cautious.

EUR/USD
EUR/USD remains structurally bullish, comfortably trading above all major daily moving averages (20, 50, 100, and 200 EMAs). The pair is consolidating above the 1.1690 support zone after a strong rally, supported by positive momentum signals from both RSI and MACD. However, the slowing MACD histogram and narrowing Bollinger Bands indicate a temporary pause rather than exhaustion. A sustained break above the 1.1870 resistance level could propel the pair towards the significant psychological barrier at 1.2000.

XAU/USD (Gold)
Gold prices remain firmly bullish in the daily timeframe, with strong buying momentum confirmed by RSI at 70 and bullish MACD signals. Yet, the price exceeding the upper Bollinger Band signals overbought conditions, increasing the risk of a short-term pullback or sideways consolidation. Support at $4,195 remains crucial to maintaining the long-term bullish trend. A breakout above $4,355 could open further upside toward $4,400, the next psychological resistance.

Key Economic Events and Outlook

Upcoming Data Releases:

• Japan’s inflation figures and Bank of Japan’s policy decision loom large. Expectations are for a 25 basis point rate hike to 0.75%, which could trigger significant volatility in the yen and currency pairs such as USD/JPY, EUR/JPY, and GBP/JPY.

• UK retail sales data will offer insight into consumer spending resilience amid recent Bank of England rate cuts and cooling inflation. Strong sales could support the pound, while weakness may reinforce expectations of further easing.

• Eurozone data, including German producer prices and consumer confidence, will influence ECB policy outlook amid ongoing inflation and growth concerns.

• Canadian retail sales and US existing home sales are also critical, with implications for monetary policy directions in their respective economies.

Summary

Thursday’s trading session was defined by volatility, driven primarily by softer-than-expected US inflation data, which briefly spurred hopes of Federal Reserve rate cuts next year, weighing on the US dollar and bond yields. Gold prices responded with a strong rally, supported by a dovish Fed outlook and geopolitical risks, though profit-taking tempered gains. Oil prices retraced as market participants weighed geopolitical tensions against looming global supply surplus risks. Currency markets remain cautious, with technical indicators signaling potential consolidation phases across major pairs ahead of key upcoming economic events.