- In midweek trading, gold futures continued their gains as investors reviewed minutes from the Federal Open Market Committee’s latest policy meeting at the bank’s final meeting in 2024.
- Spot gold prices moved to a resistance level of $2,670 per ounce before stabilizing around $2,664 per ounce at the time of writing.
According to platforms of gold trading companies, the price of gold has increased by 1.5% since the beginning of the new year. Similarly, the price of silver tried to reach $31 per ounce. According to trading, the price of silver rose by 5% in the first trades of 2025.
Signals from the US Federal Reserve and their impact on gold
The Federal Reserve yesterday released the minutes of the Federal Open Market Committee (FOMC) meeting last month. A summary of the meeting revealed two things: Policymakers are concerned about President-elect Donald Trump’s trade and immigration policies, and officials are worried about inflation risks. The minutes of the meeting added: “Almost all participants assessed that the risks for an increase in inflation have increased.” And “as reasons for this ruling, participants cited stronger than expected recent readings on inflation and the potential implications of possible changes in trade and immigration policy.”
For his part, Trump has promised to impose global tariffs and heavy tariffs on Chinese goods. He also threatened to impose heavy tariffs on Canada, Mexico and countries involved in anti-dollar efforts.
At the last meeting in 2024, FOMC members voted to cut the US interest rate by another quarter point to a range of 4.25% and 4.5%. However, they now expect just one more quarter-point cut in US interest rates this year, down from an initial estimate of four quarter-point cuts.
In general, investors believe the Fed will hit the pause button later this month. Ultimately, according to the December minutes, officials believe it would be wise to take a more cautious approach to normalizing US interest rates. Meanwhile, in what would otherwise be bad news for the gold and silver markets, precious metals remained positive as Treasury yields fell. The benchmark 10-year yield fell 1.2 basis points to 4.673%. furthermore, lower yields are good for gold prices because they reduce the opportunity cost of holding bullion without a yield.
A stronger US dollar affects the pace of growth
According to foreign exchange trading, the US dollar is still hovering near its two-year high. The U.S. Dollar Index (DXY), which measures the U.S. currency’s performance against a basket of other major currencies, rose to a resistance level of 109.06, its highest level in two years. As is well known, a stronger US dollar is a negative factor for dollar-denominated commodities as it makes them more expensive for foreign investors to buy.
Trading Tips:
Always keep gold in your trading portfolio and don’t forget that it rose 27 percent last year, supported by global geopolitical tensions, easing central bank policy and their strong gold buying. These factors still exist.
Will gold hit $3000?
In this regard, Goldman Sachs has extended its gold price target to $3,000 until mid-2026 after expecting gold to reach that level in the new year of 2025. Furthermore, the bank lowered its forecast due to expectations of smaller cuts from the US. Federal Reserve. Against that backdrop, bullish bets by hedge funds fell to their lowest level in six months, according to data from the Commodity Futures Trading Commission.
Overall, the gold price index may remain in its current environment until tomorrow, Friday’s US jobs report, which is expected to show a moderate but still healthy US labor market. Moreover, the data is unlikely to change the view that the Federal Reserve will take a more cautious approach to cutting US interest rates in 2025 amid renewed concerns about inflation.
Technical analysis of gold price and expectations today:
According to the daily chart and forecasts of gold analysts today, the overall trend is leaning more to the upside. Also, bulls are cautiously approaching the psychological resistance level of $2,700 per ounce, which could support further strong positive momentum in gold prices. The Relative Strength Index and MACD are turning upwards in this period and there are opportunities for further gains before reaching strong overbought levels. Overall, I still prefer buying gold from any lower level. Currently, the closest support levels for gold prices are $2648, $2625 and $2600 per ounce.
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