empty
26.12.2024 12:29 AM
Gold Faces Its Death Warrant

Slow down, gold bulls! In 2024, gold prices skyrocketed by 30% from the beginning of the year, reaching an all-time high of $2,790 per ounce. This surge was driven by aggressive purchases by central banks and widespread monetary policy easing. However, the Federal Reserve's decision to pause its actions, along with rumors of a potential ceasefire in Eastern Europe, has dampened the bullish momentum for XAU/USD.

Commodity Market Asset Dynamics

This image is no longer relevant

Tanglewood Total Wealth Management observes that during the Cold War, central banks allocated approximately 30% of their funds to gold purchases to replenish their reserves. However, before the conflict in Ukraine, this figure had decreased to 10%. Since then, it has risen back to nearly 20%. As a result, developments in Eastern Europe are crucial for the XAU/USD currency pair. If Donald Trump succeeds in ending the war, the value of the precious metal could face significant pressure.

Gold is already being affected by the slowing monetary policy easing cycles of major central banks around the world. The Fed, after a rate cut, indicated a pause in January. The Bank of England decided not to adjust its borrowing costs. Similarly, both Canada and Mexico have abandoned plans for aggressive 50-basis-point rate increases, and the Swiss National Bank's statements have raised doubts about the continuation of monetary easing cycles.

Central Bank Rate Trends

This image is no longer relevant

As central banks lower interest rates, fiat currencies tend to weaken, which benefits gold. Simultaneously, bond market yields decline, benefitting the non-yield-bearing precious metal. Consequently, any pauses in monetary easing or slower rate cuts can negatively impact the XAU/USD exchange rate.

Gold's reaction to monetary policy is clear; for example, it rallied after the U.S. personal consumption expenditures (PCE) index slowed to 0.1% month-over-month in November, but then dropped when the Federal Open Market Committee (FOMC) updated its forecasts. Therefore, the main challenges for gold in 2025 are likely to include rising real yields on Treasury bonds, an acceleration in the U.S. economy, and the resulting strengthening of the dollar.

This image is no longer relevant

The outcome will largely depend on the implementation of Donald Trump's policies. Fiscal stimulus and deregulation could boost U.S. GDP growth. However, when combined with anti-immigration policies and tariffs, inflation may also rise. This scenario could lead to a rally in the USD index and higher yields on U.S. bonds. Furthermore, if the conflict in Eastern Europe comes to an end, it could significantly impact the prospects for XAU/USD bulls.

From a technical perspective, the daily chart for gold shows a "Splash and Shelf" pattern based on a 1-2-3 structure. As long as prices remain below fair value and a combination of moving averages, the outlook for gold remains bearish. A decline in gold prices below support levels at $2,608 and $2,590 per ounce may warrant opening or increasing short 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

XAU/USD. Analysis and Forecast

Gold continues to rise as investors remain concerned about U.S. President Donald Trump's aggressive trade policy and its impact on the global economy. In addition, ongoing geopolitical tensions serve

Irina Yanina 13:22 2025-04-02 UTC+2

AUD/USD: Analysis and Forecast

Today, the AUD/USD pair is showing positive momentum, rebounding from nearly a four-week low. Support has come from the Reserve Bank of Australia's less "dovish" stance, with the central bank

Irina Yanina 12:25 2025-04-02 UTC+2

Markets May React to New U.S. Tariffs with Growth—But Under One Condition... (GBP/USD Downside and USD/CAD Upside Possible)

The day Donald Trump declared "Liberation Day" has arrived. Markets are bracing for the U.S. to introduce comprehensive and large-scale tariffs on its trade partners and potential retaliatory measures from

Pati Gani 09:51 2025-04-02 UTC+2

The Market Needs Proof

It's too late to be afraid. Rumors are circulating in the market that the White House may implement a universal 20% levy instead of reciprocal tariffs—pushing the average import duty

Marek Petkovich 09:16 2025-04-02 UTC+2

What to Pay Attention to on April 2? A Breakdown of Fundamental Events for Beginners

There will be very few macroeconomic events on Wednesday, but yesterday showed us that even a large number of macro reports do not always trigger significant movement—even within

Paolo Greco 06:25 2025-04-02 UTC+2

GBP/USD Pair Overview – April 2: The Pound Still Stuck in Place

The GBP/USD currency pair continues to trade in a flat range. On the 4-hour timeframe, this is a classic flat; on the lower timeframes, it looks more like a "swing."

Paolo Greco 05:14 2025-04-02 UTC+2

EUR/USD Pair Overview – April 2: The Dollar Gets Unlucky Again

The EUR/USD currency pair continued trading sluggishly and reluctantly on Tuesday. The market continued anticipating new tariffs from Donald Trump, even though the macroeconomic background was very strong yesterday. While

Paolo Greco 05:13 2025-04-02 UTC+2

Bitcoin caught in bull trap

The bottom shows no strength, the top has no desire. Even the so-called "smart money" is not rushing to buy Bitcoin, citing a confluence of negative factors. Tepid trading activity

Marek Petkovich 15:58 2025-04-01 UTC+2

USD/JPY. Analysis and Forecast

Today, the USD/JPY pair is struggling to benefit from a slight intraday upward movement, especially amid expectations that the Bank of Japan may raise interest rates at a faster pace

Irina Yanina 11:37 2025-04-01 UTC+2

US stock market: bad news fully priced in

The S&P 500 had its worst quarter in three years. Investors are shifting capital from North America to Europe. Once-booming US tech stocks have collapsed. Major banks and respected institutions

Marek Petkovich 09:13 2025-04-01 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.