Forex Analysis & Reviews: 26.12.2024 - Gold Faces Its Death Warrant

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Key documents

Social Responsibility

InstaForex Loprais Team - Official participant of the Dakar rally

26.12.2024 12:29 AM

Gold Faces Its Death Warrant

Slow down, gold bulls! In 2024, gold prices skyrocketed by 30% from the beginning of the year, reaching an all-time high of $2,790 per ounce. This surge was driven by aggressive purchases by central banks and widespread monetary policy easing. However, the Federal Reserve's decision to pause its actions, along with rumors of a potential ceasefire in Eastern Europe, has dampened the bullish momentum for XAU/USD.

Commodity Market Asset Dynamics

Tanglewood Total Wealth Management observes that during the Cold War, central banks allocated approximately 30% of their funds to gold purchases to replenish their reserves. However, before the conflict in Ukraine, this figure had decreased to 10%. Since then, it has risen back to nearly 20%. As a result, developments in Eastern Europe are crucial for the XAU/USD currency pair. If Donald Trump succeeds in ending the war, the value of the precious metal could face significant pressure.

Gold is already being affected by the slowing monetary policy easing cycles of major central banks around the world. The Fed, after a rate cut, indicated a pause in January. The Bank of England decided not to adjust its borrowing costs. Similarly, both Canada and Mexico have abandoned plans for aggressive 50-basis-point rate increases, and the Swiss National Bank's statements have raised doubts about the continuation of monetary easing cycles.

Central Bank Rate Trends

As central banks lower interest rates, fiat currencies tend to weaken, which benefits gold. Simultaneously, bond market yields decline, benefitting the non-yield-bearing precious metal. Consequently, any pauses in monetary easing or slower rate cuts can negatively impact the XAU/USD exchange rate.

Gold's reaction to monetary policy is clear; for example, it rallied after the U.S. personal consumption expenditures (PCE) index slowed to 0.1% month-over-month in November, but then dropped when the Federal Open Market Committee (FOMC) updated its forecasts. Therefore, the main challenges for gold in 2025 are likely to include rising real yields on Treasury bonds, an acceleration in the U.S. economy, and the resulting strengthening of the dollar.

The outcome will largely depend on the implementation of Donald Trump's policies. Fiscal stimulus and deregulation could boost U.S. GDP growth. However, when combined with anti-immigration policies and tariffs, inflation may also rise. This scenario could lead to a rally in the USD index and higher yields on U.S. bonds. Furthermore, if the conflict in Eastern Europe comes to an end, it could significantly impact the prospects for XAU/USD bulls.

From a technical perspective, the daily chart for gold shows a "Splash and Shelf" pattern based on a 1-2-3 structure. As long as prices remain below fair value and a combination of moving averages, the outlook for gold remains bearish. A decline in gold prices below support levels at $2,608 and $2,590 per ounce may warrant opening or increasing short positions.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.