EBC Markets Briefing | Bullion could gain for a third straight year

Gold was hovering around its three-week high on Monday after traders return from holiday. Chinese dealers charged higher premiums in anticipation of stronger demand ahead of the upcoming Chinese New Year.

JPMorgan forecasts gold will rise toward $3,000 this year as it “still looks well situated to hedge the elevated levels of uncertainty around the macro landscape heading into the initial stages of the Trump administration in 2025.”

Goldman Sachs similarly forecasts bullion will reach $3,000 by the year end amid continued purchases from central banks. But it said the price could stall at $2,900 if the Fed only cuts rates once this year.

The “dot plot” suggests the central bank will lower interest rates twice in 2025, compared with four quarter-point cuts previously expected in September A major concern is Trump’s proposed tax cuts and tariffs.

Gold and real Treasury yields have not been always negatively correlated for the last few years thanks to central bank demand. China has been on a buying spree in particular to brace for decoupling from the US.

The dollar jumped to a two-year high last week, building on last year’s strong performance. Meanwhile, US stocks have showed some weaknesses since mid-December, which helped underpin bullion.

Gold failed to break above 50 SMA decisively early this month. If it continues to trade below the level for an extended period, we see the price tumble below $2,600 again.

EBC Financial Risk Management Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Financial News or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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