gold prices have resumed their upward movement, beginning 2025 with optimism as they break free from the $2,600 level. The trend indicates a potential target of $2,650 as market participants react positively, despite a robust US Dollar.
Currently, the US Dollar is benefiting from a risk-averse sentiment among investors, who are cautious ahead of forthcoming policies from President-elect Donald Trump and the actions of the Federal Reserve. The Fed’s December meeting hinted at a more hawkish stance, leading to increased speculation about a pause in interest rate cuts for the month.
While the strength of the Dollar usually exerts downward pressure on gold , the recent lull in US Treasury bond yields appears to support gold prices. Additionally, market anxieties regarding China’s economic outlook and rising geopolitical tensions, particularly in the Middle East, have driven investors toward safe-haven assets like gold .
Recent data highlights a slowdown in Chinese manufacturing activity, with December’s Caixin Manufacturing PMI falling to 50.5 from November’s 51.5, missing expectations. This data has raised expectations for more supportive economic policies from China, the world’s largest consumer of gold , which could further bolster demand for the metal in 2025.
The ongoing dynamics in risk sentiment and US Dollar fluctuations are expected to continue influencing gold prices, especially in the context of holiday-thinned trading conditions. The reentry of US traders after the New Year may lend stronger support to the Dollar, potentially constraining gold ’s upward momentum.
Technically, gold is currently testing the 21-day Simple Moving Average at approximately $2,635. A decisive move above this level could pave the way for a challenge of the psychological $2,650 level and the 50-day SMA at $2,655. Conversely, any close below the 100-day SMA at $2,624 may mark a reversal in momentum, with further declines toward $2,596 and below.
