On Monday, spot gold fell under pressure from high levels, with a drop of nearly $30 at one point. As of now, the gold price is 2669.37.
New York Fed Survey: 1-year inflation expectations are 3%, and interest rate futures traders are pricing in a Fed rate cut of less than 25 basis points this year, or less than once.
Foreign media said that Trump's team is studying a monthly tariff increase of 2%-5%, but Trump himself has not yet evaluated or approved the idea of gradual tariffs.
Sources revealed that the ceasefire negotiations in Gaza have made a breakthrough, and Qatar has submitted the "final" draft of the agreement to Israel and Hamas. Hamas officials also said that they are "very close" to reaching a ceasefire agreement with Israel; US President's National Security Advisor Sullivan believes that it is possible to reach an agreement on the Gaza region this week.
Greenland Autonomous Government: Will set conditions for strengthening defense and mining ties with the United States. Greenland is not for sale.
Although the resumption of gold purchases by the People's Bank of China at the end of last year attracted widespread attention, in fact, the Polish central bank led all central banks in buying in 2024. The four countries with the largest central bank gold demand in 2024 - Poland, Turkey, India and China - accounted for 72% of the total central bank demand. Turkey and India have made net purchases every month in 2024, while Poland has been buying gold since April. While China's resumption of gold purchases is a positive indicator of continued demand in 2025, India and Turkey appear to be more reliable demand drivers. These countries may continue to use gold as a reserve diversification tool as their currencies continue to weaken against the US dollar, while the RMB has been rising since October.
In addition, although US Treasury yields have been rising at the beginning of this year, inflation concerns and geopolitical uncertainty continue to support gold's safe-haven appeal. The historical dynamics between yields and gold remain abnormal at present. And the recovery of US Treasury yields is usually a reliable recession indicator. Based on the historical lag between recovery and the beginning of recession, we believe that the United States may fall into recession from the second quarter of 2025, and the US economic growth is expected to reach 2.6% in 2025.
However, this is a potential downside risk for industrial demand for silver. In the event of a recession, silver may find it difficult to maintain levels above $30 in 2025. At the same time, the market is now starting to price in the possibility of Trump 2.0 introducing new tariffs on precious metals. Silver futures are trading at an unusually high premium to physical EFPs, meaning investors are choosing to take physical metal delivery now to avoid possible tariffs on future delivery. This coincides with the bid for the front-month silver futures contract rising to a 10-year high of $0.6/oz. While additional tariffs on gold are not a done deal, the possibility is fueling volatility. This dynamic could lead to an outflow of silver from the LME.
The scarcity of economic data on Monday left investors with the need to digest Friday's non-farm payrolls. As U.S. Treasury yields rose to their highest level since November 2023, safe-haven traders bought the dollar, pushing gold back in yesterday's U.S. session. However, despite better-than-expected economic performance, traders are still watching the release of U.S. CPI data. Inflation data could change market expectations of the Fed's easing policy. In addition, gold also suffered a blow yesterday after the good news of a possible agreement to end the Gaza conflict came out.
Technically, spot gold paused its rise on Monday, closing with a bearish engulfing pattern on the daily line, indicating that bears are gathering momentum. The RSI indicator also slightly confirmed this, and although it still maintains a bullish momentum, it has a downward trend below the neutral level. Therefore, gold may fall further in the short term. If spot gold falls below $2,650, the next support level will be the 50-day moving average of $2,643, and then the 100-day moving average of $2,633.
On the other hand, if spot gold retakes $2,700, the next resistance level will be the December 12 high of $2,726 and the all-time high of $2,790.
I think that developments in the bond market cannot be ignored, nor can the rising US dollar. Investors have repriced US interest rates higher, first of all due to expectations of inflationary policies under Trump's later inauguration, which has supported the US dollar. At the same time, we have seen unexpectedly strong US data. This was re-emphasized by Friday's non-farm payrolls report, indicating that the labor market seems to be gaining momentum again. As a result, traders have now postponed the full pricing of the next Fed rate cut until the beginning of the fourth quarter.
Following the solid employment report, attention turns to the US CPI in the middle of the week. If Wednesday's CPI inflation data shows signs of persistence, any calls for a rate cut in the first half of the year will be firmly dismissed again. In any case, the upside potential for gold may be limited until something fundamental changes. Against this backdrop, my near-term gold forecast is not optimistic.
Gold prices fell below the previous bearish trend line, which just passed through the key resistance area of 2690, which was the base point of the December break. In addition, the 61.8% Fibonacci retracement level of the October high is also near this area, that is, $2693. If the bears come back, the first line of defense for the bulls is at $2650 or slightly lower, which is a support trend line that has existed since the middle of last year. However, if this trend line is decisively broken, then we may see the beginning of a larger adjustment, and the support levels of $2600, $2530 and $2500 may become the focus.
Meanwhile, the next resistance level to watch is between $2710-2725. If gold can break through this area, despite all the macro factors described above, it will be a strong technical signal and will most likely pave the way for a new record higher than last year's high of $2,790.
Data Analyst Chris Ruthergren: Gold has laid the groundwork for an inevitable breakout and may have already broken through or is in the process of doing so
In the first full trading week of the new year, gold prices have performed well as volume returns and appear to be breaking out. Looking at the spot gold price chart, we can see that Friday's price action broke out of the consolidation range shown in the chart. However, if we look at a similar chart of gold futures (GC) prices, we can see that although the price touched the upper limit of the consolidation range on Friday, it did not break out. In addition, if we switch our perspective from the daily chart to the weekly chart, the gold futures chart may show more convincing signs of a breakout, with the price breaking out of a potential bull flag pattern.
Therefore, how to interpret it depends on the perspective: the price has either broken out or is in the process of breaking out. In either case, the underlying data still shows a continued increase in bullish positioning, which has laid the groundwork for an inevitable breakout. In the gold options market in particular, the put/call volume ratio has continued to show an increase in call options activity over the past few weeks. Last week, this ratio fell rapidly, indicating that the market's bullish sentiment has further accelerated.