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Gold Commentary
Gold Market
Gold started December with a bullish momentum, reaching a intra-month high near $2,660 per ounce, fueled by expectations of Federal Reserve rate cuts and ongoing geopolitical tensions. However, the metal saw a retreat from these highs, with prices fluctuating around the $2,631 to $2,636 range towards the end of the month, displaying signs of consolidation or a minor correction within a broader uptrend.
Price Performance Overview:
Early December: Gold experienced upward pressure, briefly breaking through resistance levels, driven by safe-haven demand amid geopolitical unrest and a weakening dollar due to anticipated monetary policy easing.
Mid-December: There was a notable pullback as profit-taking occurred post the initial surge. This was partly due to holiday-thinned trading volumes which often lead to increased volatility and less predictable price action.
Late December: Prices stabilized, with gold trading sideways, testing the lower boundaries of its ascending channel. This period highlighted the metal's resilience, maintaining above critical support levels despite the retreat from earlier highs
Technical Analysis:
Trend Overview:
Gold has been navigating through an ascending channel since early in the year, with the price action in December suggesting a consolidation or minor correction within this broader uptrend. The current movement shows gold testing the lower boundary of this channel, indicating potential buying opportunities if this support holds.
Support Levels:
Immediate Support: Gold has found support around $2,600, which aligns with the lower boundary of the ascending channel. This level is critical, as it has been tested multiple times in the past few weeks, showing resilience.
Further Supports: Below this, there are psychological and technical supports at $2,595, $2,580, and a more substantial support at $2,550, which also corresponds to the 38.2% Fibonacci retracement level from the significant move up from the March 2024 low.
Resistance Levels:
Immediate Resistance: The first significant resistance is observed at $2,637, which matches with the 23.6% Fibonacci retracement from the year's high to low.
Higher Resistances: Subsequent resistance levels are noted at $2,647, $2,660, and a more formidable resistance at around $2,680, where a false breakout occurred earlier in the month, suggesting this could be a challenging level for gold to surpass without significant bullish momentum.
Trend Lines:
Uptrend Line: Gold has been respecting an uptrend line from the lows of early December. A break below this line could signal a shift towards a more bearish outlook, potentially targeting lower supports.
Bearish Trend Line: Short-term, there was a brief break below a downward trend line, suggesting a possible short-term bearish reversal, but the price has since shown signs of stabilization, challenging this bearish view in the immediate term.
Fibonacci Retracement Levels:
From the yearly high to the recent low:
38.2%: At $2,550, this level has acted as a strong support where buying interest has historically emerged.
50%: Around $2,518, this is a significant level where gold has found support in the past. It's also near the $2,550 support, creating a potentially strong support zone.
61.8%: This level would be at approximately $2,475, not yet tested in this correction but could be a critical point if gold continues to decline.
Technical Indicators:
MACD: The MACD is showing signs of losing momentum, with lines possibly converging for a bearish crossover, suggesting caution for the immediate short-term trend.
RSI: The Relative Strength Index is in the neutral zone, indicating neither overbought nor oversold conditions, which supports the view of a consolidation phase rather than a clear directional move.
Moving Averages: Gold is trading above the 50-day moving average but has recently crossed below the 20-day moving average, signaling a potential short-term bearish signal within the broader uptrend.
Market Sentiment and Trading Suggestions:
The market sentiment gleaned from posts on X platform suggests caution, with many traders looking for a clear break above $2,680 for bullish confirmation or a break below $2,580 to confirm bearish trends.
Given the holiday period, the market has seen reduced liquidity, which can lead to exaggerated movements on both sides. Traders are advised to look for signs of momentum re-establishment or significant volume changes post-holidays to validate any breakout or breakdown.
Influencing Factors:
Rising Treasury Yields: The market is currently characterized by caution due to rising U.S. bond yields and the anticipation of economic policy directions from the U.S. following recent elections, impacting gold's non-yielding nature.
Geopolitics: Several key tensions continue to drive the metal's price dynamics including the Israel-Hamas conflict, regime change in Syria, the ongoing escalation of the Russia-Ukraine war, and the strange UAP sightings in the eastern seaboard of the U.S.
The U.S. presidential election result with Donald Trump's victory has introduced a layer of uncertainty regarding future U.S. policies, especially concerning international trade, tariffs, and diplomatic relations. Investors are wary of potential trade tensions, especially with China, and the unpredictable nature of U.S. policy under Trump's administration, which could lead to a flight to safety in gold. This scenario is compounded by concerns over how Trump's policies might affect global economic stability and the U.S. dollar's role as a reserve currency.
BRICS Nations and Dollar Dominance: The BRICS countries continue to challenge the dominance of the U.S. dollar by increasing their gold reserves and possibly considering gold-backed trade mechanisms, which could undermine the dollar's status as the world's reserve currency. This shift is seen as a long-term bullish signal for gold, with any immediate policy announcements or actions from these nations potentially leading to short-term price spikes.
The general market sentiment showed a cautious optimism. There's an acknowledgment of gold's uptrend but also a recognition of the potential for short-term volatility, especially with the holiday season affecting liquidity. Analysts and traders on social media were closely monitoring key levels for signs of a breakout or breakdown. Despite some volatility and a retreat from early highs, gold managed to close December with a slight gain from November, maintaining its allure as a safe-haven and inflation hedge. The market's behavior suggests a consolidation phase, preparing for potential moves in the New Year, contingent on economic data, geopolitical developments, and monetary policy directions.
Outlook
2025 Gold Price Outlook:
The expert outlook for gold prices in 2025 and beyond reflects a generally bullish sentiment, although forecasts vary in specifics due to the complexity of factors influencing gold markets. Here's a synthesis based on current analyses:
Price Predictions: Several financial institutions and experts have made bold predictions for gold prices in 2025. Goldman Sachs has forecasted gold could reach $3,000 per ounce by 2025, suggesting a significant increase driven by central bank buying and potential U.S. interest rate cuts.
Driving Factors: Lower interest rates, persistent geopolitical risks, and strong dollar-diversification trends are expected to continue supporting gold prices. UBS has highlighted these aspects, noting the metal's role as a global hedge.
Market Dynamics: There's an expectation that gold might experience volatility but with an overall upward trend, potentially reaching or even surpassing $3,000 per ounce. This is partly due to central banks increasing their gold reserves and the continued demand from investors seeking safe-haven assets.
Beyond 2025:
Long-term Trends: Looking further ahead, some analysts predict even higher prices, with forecasts suggesting gold could reach between $4,000 and $5,000 per ounce by 2030 or beyond. This is based on expectations of ongoing inflation, economic uncertainty, and continued central bank purchases.
Geopolitical and Economic Factors: The ongoing geopolitical tensions and economic policies, particularly in major economies like the U.S. and China, will play significant roles. The U.S. dollar's strength, interest rate policies, and global economic stability or instability will continue to be key influencers.
Investment Sentiment: The perception of gold as a safe haven will likely keep it in demand, especially if there are shifts in investor sentiment towards more conservative investments amidst global uncertainties.
The consensus seems to be a bullish outlook for gold, driven by traditional factors like inflation hedges, central bank policies, geopolitical tensions, and an increasing demand from emerging markets. However, the long-term forecasts are subject to various economic, political, and market dynamics, making them speculative to some degree.
Interesting Posts on X.com
@NorthstarCharts:
"This simple ratio chart suggests that Bitcoin is on a path to stop outperforming gold. Peripheral evidence suggests gold is close to embarking on a huge multi-year upside move. Keep an open mind, and simply observe and respond to the evidence."
https://x.com/NorthstarCharts/status/1871144608958202317
.jpeg?width=1120&upscale=true&name=NorthStar%20Charts%20-%20Bitcoin%20vs%20Gold%20(December%202024).jpeg)
@J_Wise_geology:
The amount of gold mined in all of history to the right.
The amount of gold it would take to pay off the US federal debt on the left- more or less.
https://x.com/J_Wise_geology/status/1869927798208704719
@LukeGromen interview: https://x.com/WhatisMoneyShow/status/1866580402623959505?t=5085
Skip to 1:24:45 for "Gold and the Dollar Endgame"
@MakeGoldGreat:
BREAKING: The SGE announces ZERO storage and loading for international traders for all of 2025! China wants ALL the #gold to suck East! https://x.com/MakeGoldGreat/status/1870578460802031915
Price Performance & Forecast
Price Performance Charts: Since January 1/20, 1-Year, 3-Month, 1-Month
Gold Price vs. S&P 500 vs. Nasdaq vs. Dow Jones ending December 31, 2024
(Source: WGC, STLLR Estimates, TradingView)
Gold Price Performance Per Currency
Currency
September
1-Year
USD
-1.6%
+25.5%
Euro
+0.1%
+33.7%
JPY
+3.4%
+39.7%
GBR
-0.2%
+27.5%
CAD
+0.9%
+36.4%
CHF
+1.1%
+35.1%
INR
-0.5%
+29.0%
CNY
-0.9%
+28.9%
TRY
+0.2%
+50.6%
SAR
-1.6%
+25.7%
IDR
+0.6%
+31.6%
AED
-1.6%
+25.5%
THB
-1.8%
+25.6%
VND
-1.1%
+31.8%
EGP
+0.9%
+106.4%
KRW
+3.9%
+43.6%
RUB
+2.1%
+56.3%
ZAR
+2.9%
+27.7%
AUD
+3.1%
+38.0%
(Source: WGC, Goldprice.org)
GOLD M&A - H2/2024
2024 was a busy year, here is a list of notable M&A transactions in the gold sector in the second half:
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