Gold Futures Surge as Central Banks Buy Amid Geopolitical Volatility Concerns in 2024
In a bullish tone, central banks have been increasing their buying spree, driven by growing concerns over geopolitical volatility if Donald Trump returns to power on the global stage. Gold futures saw a slide since November 5, 2024, following the outcome of the presidential election and facing resistance at $2750. Despite this, they managed to hold above the significant support at the 50 DMA on a daily chart.
From November 5, 2024, to January 20, 2025, gold futures traded in a narrow range under bearish pressure before US President Donald Trump took office. With Trump’s arrival, gold futures started moving upward and hit a fresh high at $2955 on February 20, 2025, after confirming pre-election commitments.
However, the focus in the global economic scenario may now shift to stagflation due to developments on imposing tariffs and retaliatory tariffs. Analysis of gold futures movements from November 21, 2024, to February 21, 2025, suggests a defined territory for both bulls and bears between $2706 – $2950, with potential for a significant shift.
Key Technical Levels to Watch:
– On the weekly chart, failure to break above the resistance at $2955 could lead to a downward trend, testing support levels at $2766 and $2716. A further breakdown could turn the trend bearish, targeting $2524 by the end of March 2025.
– Conversely, a sustained move above $2955 could signal bullish momentum, testing resistance at $3058. This could present a short position opportunity at $3073 with a stop loss at $3235 for a target of $2525 by May 5, 2025.
– On the daily chart, gold futures are struggling to hold above $3058 with a potential target at the 200 DMA at $2571 by March 2025.
– In the 4 Hr. chart, gold futures are facing resistance at $2940, with potential for a bearish crossover. Traders should monitor next week’s opening levels for clearer directional moves.
Takeaway for Traders:
Traders should exercise caution amid the uncertainty surrounding geopolitical events and trade tensions. The analysis provides insights into potential price movements, but readers are advised to make informed decisions based on their own research and risk tolerance.