empty
04.12.2024 12:39 PM
Gold Remains Hopeful

The collapse of gold following the Republican victory in the US elections was a real shock for XAU/USD bulls, yet it has not thrown them off track. The precious metal was seen as one of the main beneficiaries of Trump-era trade policies but, in reality, lost some of its hard-earned gains. Neither the political crisis in France, the declaration of martial law in South Korea, nor the breakdown of the ceasefire between Israel and Hezbollah has been able to support it. Nevertheless, Goldman Sachs still forecasts prices rising to $3000 per ounce, and it is not alone in this prediction.

Capital Economics believes that despite the strong headwinds in the form of a strengthening dollar and rising Treasury yields, gold is likely to rise. The rally in XAU/USD will be driven by alternative factors – central bank gold purchases and the revival of demand from China.

It is commonly accepted that gold rises during periods of Federal Reserve monetary policy easing and falls when the central bank raises interest rates. However, in 2022-2023, XAU/USD prices rose even amid the most aggressive monetary tightening by the Fed in decades. The key to this lies in record central bank gold purchases as part of de-dollarization and reserve diversification efforts, as well as China's insatiable appetite for gold.

BRICS Countries' Gold Reserves Share Dynamics

This image is no longer relevant

In 2024, these drivers seemed to have stopped working. The People's Bank of China (PBoC) has not bought gold for almost six months. However, Donald Trump's threat of imposing a 100% import tariff on goods from the Alliance countries may reignite central banks' interest in gold. De-dollarization does not necessarily imply the creation of a competing currency; it can also manifest in the diversification of foreign exchange reserves in favor of gold.

Record-high gold prices have cooled demand from Asian buyers. However, as XAU/USD corrects, demand is likely to rise. Beijing has not solved its own economic problems, including the real estate crisis and sluggish domestic demand. Trump's protectionism risks worsening these issues. In such a scenario, gold will likely be seen as a better alternative to stocks and bonds.

Structure and Dynamics of Chinese Gold Demand

This image is no longer relevant

This image is no longer relevant

Thus, the old and reliable drivers of the XAU/USD rally could once again support the bulls. But will they be enough to restore the uptrend? Donald Trump's tariffs and fiscal incentives could fuel inflation, forcing the Fed to pause its interest rate cuts, strengthening the dollar, and raising US Treasury yields. Can gold withstand such headwinds?

Technically, on the daily chart of gold, a child pattern (called Spike and Shelf) has formed within the parent pattern 1-2-3. A breakdown of support at $2620 per ounce will trigger sales. A successful breakthrough of resistance at $2660 will set up long positions.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

What to Pay Attention to on March 27? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Thursday, and even fewer are deemed important. The only report that deserves attention is the third estimate of U.S

Paolo Greco 05:42 2025-03-27 UTC+2

GBP/USD Pair Overview – March 27: The British Pound Stalls

On Wednesday, the GBP/USD currency pair openly traded in a flat range. Volatility remains low, with no trending movements even within the day. In other words, the market is simply

Paolo Greco 03:06 2025-03-27 UTC+2

EUR/USD Pair Overview – March 27: Donald Trump Steps Back

On Wednesday, the EUR/USD currency pair continued trading with minimal volatility and a slight downward bias. Trading volumes were absent, which is unsurprising—there has been very little news this week

Paolo Greco 03:06 2025-03-27 UTC+2

GBP/USD. A Rough Patch for the Pound

The UK inflation report failed to support the pound—all components of the release came in below expectations. On the one hand, this report is unlikely to influence the outcome

Irina Manzenko 23:41 2025-03-26 UTC+2

The Dollar Will Loosen Its Grip

The euro is retreating cautiously, worried about a potential trade war between the European Union and the United States, while the dollar is on track for its worst month

Marek Petkovich 23:41 2025-03-26 UTC+2

Donald Trump sows confusion again with tariff remarks

United States President Donald Trump once again stirred confusion on Tuesday by announcing plans to introduce a series of exemptions to his sweeping tariff proposal. The announcement served

Jakub Novak 11:36 2025-03-26 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show a positive tone today, but conviction behind the upward movement remains weak. Market uncertainty, driven by the tariffs announced by Donald Trump—set to take effect

Irina Yanina 10:54 2025-03-26 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen remains under pressure today due to weak domestic economic data. In February, Japan's leading inflation indicator in the services sector rose by 3.0% year-over-year, slightly below

Irina Yanina 10:42 2025-03-26 UTC+2

Looks Like It's Time to Focus on the Euro and Yen (EUR/USD May Fall, USD/JPY May Rise)

Since mid-month, financial markets have been trying to recover while frantically analyzing all possible developments surrounding the trade war the U.S. launched against its largest trading partners. Investor sentiment continues

Pati Gani 08:52 2025-03-26 UTC+2

Markets Won't Rush Headfirst into the Fire

Donald Trump has dealt such a heavy blow to globalization that conditions and outlooks for the future have changed—now divided along territorial lines. While European banks believe the S&P 500's

Marek Petkovich 07:00 2025-03-26 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.