Gold prices have continued their upward momentum, surging by an impressive 27% in 2024, the strongest annual performance since 2010.
Heightened geopolitical tensions have supported gold’s safe-haven appeal. On New Year’s Day, Russia launched a drone attack on Kyiv, while the Israeli army intensified operations in northern Gaza. These developments, coupled with the ongoing Middle East and Russia-Ukraine conflicts, have bolstered gold prices.
China, the world’s largest gold consumer, resumed gold purchases in November 2024, signaling robust demand. With President Xi Jinping prioritizing economic development in 2025, optimism around China’s recovery is growing. A World Gold Council survey suggests central banks are poised to increase gold acquisitions over the next year, further boosting demand.
However, the Federal Reserve’s hawkish monetary stance poses potential headwinds for gold, as rising yields may challenge the appeal of non-interest-bearing assets. Inflation remains above the Fed’s 2% target, but future rate cuts are expected to be cautious.
Meanwhile, the US Dollar Index (DXY) trades near a two-year high of 108.292. Although a slight correction is anticipated, the softer dollar has made gold more attractive for international buyers.
Gold prices are consolidating within a narrow range, hinting at a potential breakout. Persistent geopolitical risks and expectations of increased government debt under Trump’s administration suggest a bullish outlook for 2025.
Technical Analysis (XAU/USD) – Gold
XAU/USD is trading near $2,635.55 per troy ounce, with the 4-hour chart reflecting a consolidation phase between $2,640 and $2,583. A breakout above $2,640 could pave the way for further gains.
Key resistance levels are at $2,675 and $2,730, while immediate support lies at $2,620 and $2,600. The next significant support is at the monthly low of $2,583.
With geopolitical uncertainties and strong demand dynamics, gold’s bullish momentum looks set to persist into 2025.
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
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