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

NZD/USD. Analysis and Forecast

The NZD/USD pair is attempting to regain positive momentum, supported by renewed US dollar selling. However, given the underlying fundamentals, bullish traders are advised to proceed with caution. Investors appear

Irina Yanina 19:45 2025-04-08 UTC+2

Market gives away its secret

The world is a stage, and people are its actors. Tragicomedies happen every day in financial markets, but what happened at the start of the second week of April

Marek Petkovich 11:49 2025-04-08 UTC+2

Will Tomorrow Be Better Than Yesterday? (There is a risk of renewed decline in AUD/USD and gold prices)

It's easy to stay optimistic and hope that decision-makers act according to your wishes. Why does this occur? And why can it be a trap for investors? The market sell-off

Pati Gani 09:25 2025-04-08 UTC+2

What to Pay Attention to on April 8? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Tuesday. However, the current market environment is hardly affected by the macroeconomic background. At this moment, the market has no use for standard

Paolo Greco 07:35 2025-04-08 UTC+2

GBP/USD Overview. April 8. Now It's the Pound Plunging into the Abyss

The GBP/USD currency pair continued its near-crash-like decline throughout Monday. Can anyone even explain, in hindsight, what's happening in the markets right now? There are no questions regarding the drop

Paolo Greco 06:07 2025-04-08 UTC+2

EUR/USD Overview. April 8. 2025 – The Year of Trade Wars

The EUR/USD currency pair traded with notable volatility on Monday. Particularly for a so-called "boring Monday," with no significant events scheduled. Yet yesterday was anything but boring—many experts have already

Paolo Greco 06:07 2025-04-08 UTC+2

The Pound Attempts to Hold Within the Bullish Channel

The United Kingdom is among the few G20 countries that got off relatively lightly—it was hit with a 25% tariff on car exports and a 10% tariff on other goods

Kuvat Raharjo 00:58 2025-04-08 UTC+2

The Euro Adopts a Coyote Tactic

If someone strikes your left cheek, there's no need to plead for mercy. Interestingly, more than 50 countries, according to the White House, have done just that. But not China

Marek Petkovich 00:56 2025-04-08 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is regaining ground after Friday's decline, trading just below the psychological level of 1.1000 amid mixed signals. The U.S. dollar is struggling to capitalize

Irina Yanina 18:55 2025-04-07 UTC+2

XAU/USD. Analysis and Forecast

At the moment, gold has halted its corrective decline from the all-time high reached last week. The recent plunge in global financial markets, triggered by the mutual tariffs initiated

Irina Yanina 18:52 2025-04-07 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.