- Last week, gold prices reached a new historical peak of $2,886 per ounce, driven by continued uncertainty about the future of global economic recovery amid the expansion of US trade wars and shifts in global central bank policies.
- The gold price index closed last week at around $2,861 per ounce, with bulls maintaining a strong grip, setting the stage for potential new record-breaking upward movements if current gold-boosting factors persist.
Is a $3,000 Gold Price Possible?
According to recent trades on gold trading platforms, and looking back, the pace of gold purchases by central banks globally has accelerated under the Biden administration. This, along with physical gold purchases in Asia, has been the main driver of gold prices, despite the rise in the US dollar and US Treasury yields. Furthermore, both were the result of the Federal Reserve raising interest rates to combat inflation.
The Federal Reserve announced its first rate cut since the pandemic on September 18, 2024. Since then, the federal funds rate has fallen by 100 basis points, as have bond yields. From a five-year high of 4.92% on October 22, 2023, the benchmark 10-year Treasury note yield is now 4.24%.
Both gold and silver prices have benefited from the looser monetary policy. So far this year, spot gold has risen 32% and spot silver has risen 11%.
The gold bullion market has received an additional boost from the trade war threatened by President Trump, and continued to rise with the implementation of 25% tariffs on Canada and Mexico on February 1st. Bloomberg reported that the gold price index, which is on track for its fifth consecutive weekly gain, has benefited from safe-haven demand as Trump's tariff threats raised concerns about trade wars that could undermine economic growth. Also, there are concerns that his pledges to cut taxes and reform immigration could erode US finances and rekindle inflation.
Meanwhile, the continuation of these factors combined could push spot gold prices to the historic resistance level of $3,000 per ounce sooner than expected. Also, there are other expectations that go beyond that peak, as we are in the first days of Trump's term.
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Trading Tips:
The upward path of gold supports buying from every downward level, but without risk, especially from record peaks.
The US Dollar Price Temporarily Halts Gold Gains
At the end of last week's trading. Through licensed trading platforms, the US dollar index DXY, which measures the performance of the US currency against a basket of other major currencies, rose to 108.20. Obviously, the gains came with support from the possibility of a decline in dollar flows from the United States amid new threats to impose tariffs by President Trump. Trump stated that the United States will impose retaliatory tariffs on all countries that have imposed trade tariffs on the United States next week, based on new barriers against Chinese goods and recent threats against Canada and Mexico, which were eventually postponed.
The new reciprocal tariffs will particularly affect imports from the European Union, which currently imposes tariffs on the United States. Also, it will raise the prices of American imports of pharmaceuticals, chemicals, machinery and vehicles. Meanwhile, expectations of a US interest rate cut by the Federal Reserve have been delayed amid sharper-than-expected wage growth and a weaker-than-expected unemployment rate in January, offsetting the slowdown in wages.
This week, US consumer price index and producer price index reports will provide further insights into US inflation trends.
Gold Price Technical Analysis and Expectations Today:
The upward trend in gold prices is still the strongest, and according to gold analysts’ expectations today, it is expected that bulls will continue to control and prepare for stronger upward breakouts if the factors for its gains, which were listed above, are available. The current gold prices are closest to the top of $2900 and breaking it will increase technical buying operations to move towards the psychological top of $3000 per ounce as soon as possible. From now until those tops, the technical indicators exceed the overbought levels, the most prominent of which are the MACD and the Relative Strength Index. Moreover, we still prefer the gold trading strategy by buying from every downward level but without risk and activating profit limit and stop loss orders. Finally, by considering that the opportunities for selling to reap profits will be stronger and faster if the current gold gains factors calm down.
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