XAUUSD - Gold will reach $2,700!?
Gold is located between EMA200 and EMA50 in the 4H timeframe. In case of failure of the drawn trend line, we can witness the continuation of downward trend to demand zone, and in that zone, we can buy with appropriate risk reward.
The continuation of the upward movement of gold and its reaching the supply zone will provide us with its next selling position.
Gold price volatility remains high as the precious metal reacts to changes in geopolitical instability caused by the incoming administration of US President-elect Donald Trump. However, Nitesh Shah, head of commodity research and macroeconomics at WisdomTree, still predicts that gold's upward trend will continue in 2025.
In a recent interview with Kitco News, Shah stated that he expects the US dollar to depreciate in 2025, which will benefit gold prices. He added that although Trump's policies can help strengthen the dollar at the beginning of the year, it will be difficult to maintain this trend; Because the government budget deficit will continue.
"Most likely, debt will increase and that should put downward pressure on the dollar," he said.
Meanwhile, Shah believes the Federal Reserve's interest rate-cutting policies could help lower bond yields, another factor driving gold prices higher. He said in his recent research note: "Now that we are back in the cycle of interest rate cuts, bond yields have fallen and investors are ready to buy gold again."
Although Shah is optimistic about gold, in his opinion, the price of this precious metal will have limits to growth in the coming year. He predicts that gold prices will reach around $2,850 per ounce by the fourth quarter of 2024. "The current situation is still relatively positive for gold," Shah said. "Originally, I was projecting $3,000, but according to my updated modeling, to reach that goal, bond yields would need to fall significantly from current levels."
On the other hand, the Bank of America (BofA) in its recent report has pointed out four key aspects of the future US government policies that can reduce the demand for gold in the short term. These factors include the increase in interest rates and the strengthening of the US dollar.
However, these negative factors do not in any way affect Bank of America's positive long-term outlook for gold, with gold prices expected to reach $3,000 per ounce by the end of 2025.
Deregulation: Deregulation policies in the energy and financial services sectors could increase interest rates, which would make gold less attractive.
Fiscal policy: Broader and longer tax cuts could boost short-term economic growth and push interest rates higher, posing challenges for gold.
Tariffs: The increase in tariffs on China and other major countries can lead to pressure on the currencies of emerging markets, and this may reduce gold purchases by central banks.
Fed policy: If economic growth and tariffs push up inflation, the Fed may stop the rate-cutting cycle, which would reduce the appeal of gold as a safe haven.
Impact on gold demand:
In the short term, there is a possibility of reducing the desire of investors to buy gold due to the mentioned policies.
Central banks in emerging countries may reduce gold purchases due to currency pressures from tariff risks.
The long-term outlook remains positive:
Structural demand from central banks and strategic investors underpins a positive long-term outlook for gold.
The attractiveness of gold as a hedge against geopolitical risks, economic instabilities and possible inflationary pressures remains.
Conclusion:
Although near-term policies under the incoming US administration, including stronger economic growth, higher inflation and a stronger dollar, pose significant headwinds for gold, Bank of America maintains its forecast of $3,000 an ounce by the end of 2025. . This long-term optimism stems from structural and cyclical factors that support gold demand in a challenging policy environment.
The continuation of the upward movement of gold and its reaching the supply zone will provide us with its next selling position.
Gold price volatility remains high as the precious metal reacts to changes in geopolitical instability caused by the incoming administration of US President-elect Donald Trump. However, Nitesh Shah, head of commodity research and macroeconomics at WisdomTree, still predicts that gold's upward trend will continue in 2025.
In a recent interview with Kitco News, Shah stated that he expects the US dollar to depreciate in 2025, which will benefit gold prices. He added that although Trump's policies can help strengthen the dollar at the beginning of the year, it will be difficult to maintain this trend; Because the government budget deficit will continue.
"Most likely, debt will increase and that should put downward pressure on the dollar," he said.
Meanwhile, Shah believes the Federal Reserve's interest rate-cutting policies could help lower bond yields, another factor driving gold prices higher. He said in his recent research note: "Now that we are back in the cycle of interest rate cuts, bond yields have fallen and investors are ready to buy gold again."
Although Shah is optimistic about gold, in his opinion, the price of this precious metal will have limits to growth in the coming year. He predicts that gold prices will reach around $2,850 per ounce by the fourth quarter of 2024. "The current situation is still relatively positive for gold," Shah said. "Originally, I was projecting $3,000, but according to my updated modeling, to reach that goal, bond yields would need to fall significantly from current levels."
On the other hand, the Bank of America (BofA) in its recent report has pointed out four key aspects of the future US government policies that can reduce the demand for gold in the short term. These factors include the increase in interest rates and the strengthening of the US dollar.
However, these negative factors do not in any way affect Bank of America's positive long-term outlook for gold, with gold prices expected to reach $3,000 per ounce by the end of 2025.
Deregulation: Deregulation policies in the energy and financial services sectors could increase interest rates, which would make gold less attractive.
Fiscal policy: Broader and longer tax cuts could boost short-term economic growth and push interest rates higher, posing challenges for gold.
Tariffs: The increase in tariffs on China and other major countries can lead to pressure on the currencies of emerging markets, and this may reduce gold purchases by central banks.
Fed policy: If economic growth and tariffs push up inflation, the Fed may stop the rate-cutting cycle, which would reduce the appeal of gold as a safe haven.
Impact on gold demand:
In the short term, there is a possibility of reducing the desire of investors to buy gold due to the mentioned policies.
Central banks in emerging countries may reduce gold purchases due to currency pressures from tariff risks.
The long-term outlook remains positive:
Structural demand from central banks and strategic investors underpins a positive long-term outlook for gold.
The attractiveness of gold as a hedge against geopolitical risks, economic instabilities and possible inflationary pressures remains.
Conclusion:
Although near-term policies under the incoming US administration, including stronger economic growth, higher inflation and a stronger dollar, pose significant headwinds for gold, Bank of America maintains its forecast of $3,000 an ounce by the end of 2025. . This long-term optimism stems from structural and cyclical factors that support gold demand in a challenging policy environment.
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