XAUUSD - Gold reached above $2700!Gold is above the EMA200 and EMA50 in the 1-hour time frame and is in its ascending channel. If gold climbs to the top of the channel, we can look for positions to sell it at the target of $2,700. The loss of the midline of the channel will lead to the continuation of this corrective process.
Gold is expected to continue its growth trajectory in 2025, although this growth may not match the impressive performance seen in 2024. Juan Carlos Artigas, the Head of Research at the World Gold Council, discussed the reasons behind this trend and outlined three possible scenarios for gold’s future in an interview with Kitco News.
Artigas attributed gold’s record-breaking performance in 2024, which included 40 new highs, to the metal’s dual role as an investment asset and a consumer commodity. He stated, “Gold is an extremely effective risk management tool. Investors have turned to it due to rising market volatility and geopolitical risks.”
For 2025, Artigas predicted three distinct scenarios for the gold market:
• Limited growth with low volatility: This would occur if expectations for interest rates, inflation, and economic growth remain stable.
• Downward pressure: If interest rates remain high or rise further, gold’s investment appeal could diminish. Additionally, weak economic growth might lower consumer demand.
• Significant growth: In the event of heightened market volatility and geopolitical risks, investors would likely view gold as a safe haven, driving prices higher.
Artigas cautioned that government debt could emerge as a “black swan” event in 2025. He explained that rising global government debt levels and difficulties in securing financing pose a significant risk to the global economy.
He further emphasized that gold’s performance against various currencies highlights its role as a hedge against inflation and currency devaluation. For example, gold’s returns against the Turkish lira reached 50% in 2024 due to the lira’s depreciation against the US dollar.
Additionally, Artigas pointed to increased demand from central banks and Western investors in the second half of 2024. This surge in demand was attributed to lower central bank interest rates and reduced opportunity costs for holding gold.
Among all commodities, gold remains one of the few assets that analysts at BMO Capital Markets are optimistic about for 2025. They predict that central banks will continue purchasing gold to reduce reliance on the US dollar. Furthermore, BMO expects gold to remain a dynamic asset, serving as an effective hedge against inflation, geopolitical uncertainty, and stock market risks.
Next week, Donald Trump will be sworn in as the next President of the United States. Meanwhile, the global community is bracing for the new administration, which has announced plans to impose tariffs to promote and protect domestic policies under the “America First” agenda.
BMO analysts believe the Trump administration will be “inherently” inflationary. Their report noted, “The new administration has highlighted two clear policies that will dominate Trump’s second term. The first is that 2025 will be a year of tariff increases. Since tariffs function as a domestic tax on consumption borne by consumers, the economic consensus is that tariffs are inherently stagflationary.” They added, “The second key policy involves continued increases in government spending. Trump won the election on promises of tax cuts for corporations and individuals. According to an analysis by the Committee for a Responsible Federal Budget, these promises are expected to add approximately $7.75 trillion to the US national debt between 2026 and 2035.”
BMO analysts also noted that rising inflationary pressures will likely lead to a decline in real interest rates, eroding the appeal of short-term bonds, which were a favored risk-free option in the previous year.
