XAUUSD - Gold waiting for the inflation index!Gold is above EMA200 and EMA50 in the 4H timeframe and is trading in its ascending channel. If we maintain the drawn blue upward trend line, we can witness the continued rise of gold and the limited visibility of the channel ceiling. Within the zone of supply, we can sell with appropriate risk reward. Returning below this trend line paves the way for gold to fall and you can buy within the zone of demand.
According to a report by Bank of America, gold remains on track to reach $3,000 per ounce next year. However, investors need to be patient, as the current price consolidation phase may continue through the first half of the year.
Michael Widmer, Head of Metals Research at Bank of America, stated during the bank’s 2025 Outlook webinar: “Currently, gold is stuck in an environment where there’s nothing tangible to draw investors back into the market.”
The second-largest U.S. bank has highlighted that gold faces significant challenges in the upcoming year, including weak demand from China and pressures on Western investors, who are dealing with the prospect of higher bond yields and a strengthening U.S. dollar.
The report noted, “The Trump administration is likely to pursue a mixed economic policy that, through stronger growth, higher inflation, higher interest rates, and a stronger dollar, could limit investors’ willingness to increase gold purchases in the short term.”
Bank of America strategists predict that Trump’s economic policies, such as potential trade tariffs and similar measures, may force the Federal Reserve to slow down its pace of interest rate cuts in 2025. Analysts expect only two rate cuts next year, one in March and the other in June.
Despite these challenges, precious metals experts believe that gold and silver will remain well-supported in the coming year as economic uncertainties and geopolitical turmoil continue to boost demand for safe-haven assets.
According to a recent Reuters poll of economists, 56 out of 97 respondents forecast that the Federal Reserve will lower its interest rate to 3.50–3.75% or lower by the end of 2025. Furthermore, 93 out of 103 economists surveyed predict that the Fed will cut rates by 25 basis points during its December 18 meeting, bringing the rate to a range of 4.50–4.25%.
Investors are now focusing on the U.S. Consumer Price Index (CPI), which is expected to have increased by 0.3% in November. This data could shape expectations regarding the Federal Reserve’s 2025 policy stance.
Kyle Rodda, a financial markets analyst at Capital, commented: “An expected CPI number essentially gives the Federal Reserve the green light to cut interest rates next week, and this could be the catalyst that gold has been waiting for.”
Meanwhile, Goldman Sachs views the recent decline in gold prices as merely a fluctuation and expects the metal to resume its upward trajectory soon.
Goldman Sachs cited the following reasons for its outlook:
• Accommodative monetary policies
• Central bank purchases of gold
• A return of investors to the gold market
The bank also pointed out that during the 2022 Russian invasion of Ukraine and the subsequent freezing of Russian assets by Western nations, gold emerged as an attractive alternative to the U.S. dollar. Many central banks around the world turned to gold to diversify their reserves.
Goldman Sachs stated: “We do not expect central bank demand for gold to decline. With the Federal Reserve reducing interest rates, investors will also reenter the market. We project that gold prices will reach $3,000 per ounce by the end of 2025.”
