The gold price kicked off positively during the early Asian session of the first trading day of 2024, aided by a then-softening U.S. dollar (USD) and encouraging signs from China’s economic stimulus measures. The gold price stood at around $2,065, up by 0.19 percent for the day. As the European trading session progressed on January 2, the USD strengthened modestly, with gold maintaining its intraday gains. It was trading near the $2,075 mark, which reflects an increase of over 0.50 percent for the day. This resilient performance of gold came after a recent dip from a multi-week high recorded last Thursday.
Analysts attribute this positive momentum in the gold market to a mix of factors. The growing belief that the Fed might initiate rate cuts as early as March 2024 supports the gold environment. Ongoing geopolitical tensions and China’s economic recovery are also affecting the market.
However, as USD has been recovering from a five-month low — fueled by increased U.S. Treasury bond yields — the recovery could cap further gains in gold prices. Market participants are also exhibiting caution, likely due to thin trading volumes. They also await the release of the Federal Open Market Committee minutes on Wednesday before making more significant moves. This week’s economic updates in the US, including key macroeconomic releases, could provide further direction to the precious metal market.
Prospects and trends
Technically speaking, gold bulls are now eyeing a breakthrough beyond the immediate resistance zone of $2,077 to $2,078. It could pave the way for the metal to reclaim the $2,100 mark and potentially challenge the record peak of around $2,144 set in early December.
On the downside, support levels in the gold market are identified at about $2,060 to $2,058, followed by the $2,048 horizontal zone and the $2,040 area. A failure to hold these levels might lead to a steeper decline toward the $2,020 mark or even the 50-day Simple Moving Average, which is currently near the $2,006 region.
Looking ahead, the CPM Group, a leading precious metals research firm, forecasts that the gold market will become even more bullish. They anticipate that gold prices will average well above $2,000 in 2024 and will likely exceed $2,100 per ounce in 2025.
“Gold prices have been setting annual records for the past three years. They are expected to set further records in 2024 and 2025 as the world struggles with a host of domestic and international political issues, a likely slowdown, if not outright recession, in the United States and some other developed countries, and various other economic and financial market challenges,” remarked Jeffrey Christian, a managing partner with CPM Group.
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