- Speculations have increased that gold prices will continue their record-high trajectory during the new year 2025 trading after prices recorded a historic record high during the 2024 trading.
- Also, the gold price index was on the verge of the psychological resistance level of $2800 per ounce.
- This is supported by factors such as increased demand for gold as a safe-haven asset amid growing global geopolitical tensions and purchases of gold by central banks for hedging.
Gold price gains during the year 2024
According to gold trading company platforms, spot gold prices increased by more than 26% during 2024, peaking at $2790 per ounce in the last trading session of October before stabilizing around $2626 per ounce at the time of writing. This puts it on track for its strongest annual performance since 2010. As mentioned earlier, gold's chances of rising increased due to the easing of US Federal Reserve policies and the increasing global geopolitical tensions led by the Russian Ukrainian wars and wars in the Middle East, in addition to gold purchases by central banks, which reached record levels.
Despite the decline in gold prices following Trump's victory as US president, gold's annual gains outperformed most other commodities, including a mixed year for base metals, with sharp declines in the prices of commodities such as iron ore and lithium. Looking ahead to 2025, investors are weighing the impact of uncertainty in US monetary policy and the potential challenges under a Trump presidency and China's push for economic recovery.
Will gold prices rise in 2025?
According to recent trading, we have noticed that gold prices are rising despite the strength of the US dollar, which recorded its highest in two years due to Trump’s trade. In addition to the rise in US Treasury bond yields, which are usually an obstacle to gold prices rising. Before the start of the new year, Chinese entities hacked the US Treasury in a serious breach of cybersecurity, according to the US Treasury. This increases global geopolitical tensions days before Trump’s inauguration.
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Keep in mind that the gold price path will remain upward as long as global geopolitical tensions remain, regardless of the price of the US dollar due to Trump’s upcoming trade wars.
On the technical side, the Relative Strength Index shows a balance between the dominance of bulls and bears. In the near term, the next bullish price target, as mentioned earlier, is the psychological resistance of $2700 per ounce, which could stimulate strong buying of gold. However, prices will not return to that peak without gold prices first moving towards resistance levels of $2645 and $2666 per ounce, respectively. On the downside and according to gold analysts' forecasts, breaking the support level of $2600 per ounce will be important for the bears to take control and prepare for new gold buying levels, the most suitable of which would be $2585, $2560, and $2538 per ounce, respectively. As we always recommend, do not risk, no matter how strong the trading opportunities, and in addition, activate take-profit and stop-loss orders.
US Federal Reserve Policies and Their Impact on Gold
There is no doubt that the recent move of the US dollar price towards its highest in two years was driven by a strong momentum from the US Federal Reserve's shift in policies to calm the pace of policy easing, especially after the announcement of Trump's victory in the US presidential elections, which stopped the sharp upward path of gold prices. Accordingly, the future of the US Federal Reserve's policies in the new year 2025 may have an impact on the path of gold prices in the coming months.
In this regard, and for many analysts, US monetary policy remains the driving force behind global financial markets as it seeks to balance ongoing inflationary pressures and support economic activity. Recently, expectations regarding the US Federal Reserve's monetary policy have changed significantly. In its latest meeting of 2024, the Federal Reserve suggested that it would only cut US interest rates twice in 2025; and in the updated economic projections for September, the Federal Reserve showed the possibility of making four cuts in US interest rates.
Gold Price Technical Analysis and Expectations:
Overall, analysts note that the shift in US monetary policy, which would see a slower easing cycle, makes sense as the economy is expected to remain relatively healthy at least through the first half of 2025. Accordingly, most major banks have lowered their US interest rate forecasts. Bank of America has forecast only two US rate cuts in 2025. Wells Fargo, however, seems to be a bit more hawkish, seeing only one US rate cut in 2025.
Overall, gold analysts’ strongest expectations are for gold prices to rise towards the $3,000 per ounce mark by the end of 2025.
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