Commentary for Friday, Jan 3, 2025 – Today gold closed down $13.90 at $2645.00, and silver closed up $0.19 at $29.81. What do insiders think will happen to the price of gold in 2025? In the short term the public is waiting for President Trump’s next move and how it may influence interest rates. This in turn has refocused the shifting geopolitical situation and safe haven demand. This may be one of the reasons gold is trading above $2600.00 as we begin 2025. And is a plus for the bulls. But this interest rate dynamic is confusing even for professionals so short term decisions could lead to a “whipsaw” mentality. I prefer the less troublesome, long term approach. Buy weakness and sell the physical product if you need the money – simple. At the same time, we are seeing some bullion liquidation across our trading desk as that money moves into the higher interest rate environment. Also keep in mind that the price of gold is moving lower from recent all-time highs. Increasing the notion that $3000.00 gold may have to wait on the back burner. Last Friday gold closed at $2628.70 / silver at $29.66. On the week gold closed down $16.30, and silver closed up $015.
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On Monday gold drifted lower, beginning at $2620.00 and settling on lows for the day around $2595.00. What this market needs is fresh bullish data to refocus the rank and file. Where we are now, after Christmas and moving towards next year (2025) is a kind of no-man’s land in which traders feel that the Fed may only cut rates once in the new year. Enough perhaps to spark fresh bullish interest in the physical market but not a move dramatic enough to suggest the Fed is fully satisfied that inflation will continue to cool. Which is a rather large loose end all things considered. Trading the metals over the holiday season is problematic. Still, I would give bullish sentiment a plus in that gold has not fallen out of bed even as this market trends lower.
Keep in mind that gold is up 26% ($536.00) this past year. That is a tempting target for the sidelined “short” trade. What if the Fed, or the President gets this transition wrong? I could argue bullish or bearish scenarios for gold or silver. But my guess is that smart money remains uncommitted. This may be a good time however to consider a rebalancing of physical positions (gold versus silver) relative to the long term outlook. But I imagine you have time, as the dollar gets stronger and technical selling continues to pressure the price of gold.
FXEmpire (Christopher Lewis) – Gold Continues to See Overhang – “During the trading session on Monday, the first thing that I saw in the gold market is that we still remain somewhat sluggish, and at this point time I think we are basically trying to find some reason to get bullish. At this point, it’s very difficult. Technical Analysis – Gold markets have been somewhat back and forth during the early hours on Monday as we continue to just kill time underneath the 50-day EMA. With this being the case, we also have to face the uptrend line as well. So let’s pay close attention to the $2,600 level in this environment. If we can turn around and break above the 50-day EMA, then it’s possible that the market goes looking to the $2,700 level. But really right now, we don’t have any reason for that to happen. That’s the biggest takeaway from here, even though the technical analysis suggests that perhaps we’re in an area where something could happen. We’re at the end of the year, there is no liquidity. Furthermore, interest rates in America continue to climb and that does work against gold eventually. So we’ll see how that plays out. Right now, I’m pretty neutral on this and have no real interest in putting money to work, but if we were to break down below the $2,500 level, something that’s not going to happen quickly, then that could change the entire trend. Breaking above the 50-day EMA might be the one signal that I would look at this time of year, but even that would be short-term at best. I suspect gold is a very neutral market for a while, maybe even mimicking what we had seen in late spring, early summer this year where we just kind of bounced around. I’m not negative about gold. I’m just not overly positive at the moment. Silver Continues to See Overhead Pressures – The silver market has been selling off recently, as the market continues to watch the interest rate markets show higher yields. This works against the silver market at times, and this might be one of them. Technical Analysis – The silver market initially did try to rally a bit in the early hours of Monday, but you can see we’re still struggling to find any momentum, and this does make a certain amount of sense as interest rates in America continue to climb despite the fact that the Fed has been cutting. If that’s going to be the case and things are going to get more expensive as far as borrowing is concerned, that has a direct effect on industrial production, industrial metals. Keep in mind, silver is an industrial metal, not just a precious metal. So, you do have to understand that maybe this trend line break could be the beginning of something new. This breakdown isn’t actually confirmed until we break below the previous low somewhere near the $28.80 level, but it certainly looks like we’re going to try to do that. If we break down below there, then everything points to lower silver prices, probably down to about $26.40 or so. If we turn around and recapture the $30 level, then silver has a chance to go higher. But really at this point in time, I just don’t see any effort here. Now, having said that, it is the end of the year and liquidity is a bit of an issue. So that might be the one thing that you can look to and say, okay, maybe silver’s all right. It’s just not attracting a lot of inflows. But as I’m saying right now, it needs to prove itself before I buy.”
On the day gold closed down $11.10 at $2606.10, and silver closed down $0.55 at $29.11.
On Tuesday the price of gold challenged recent highs at $2625.00 as some traders believe that bullish sentiment got a shot in the arm over a second Trump presidency. Other experts are less sanguine seeing only a bit of book squaring going into the last trading day of this year. I’m probably in the middle of these two extremes and would like to see interest rates continue to drift lower before serving the chilled bullish champagne for the New Year.
Like I said yesterday I’m concerned about the possibility of profit taking in both gold and silver going into 2025. But frankly I might be overreacting. The rising tension over our new President and the dreadful state of world politics might be enough to cushion bearish downdraft.
Reuters (Sherin Elizabeth Varghese) – Perfect storm fuels gold’s best year in 14 as Trump 2.0 looms – “Gold prices were poised for an annual surge of over 26%, their biggest yearly rise since 2010, driven by safe-haven demand and central banks’ rate cuts, although the mood could turn more cautious depending on policy shifts under a second Trump presidency. Spot gold rose 0.3% to $2,612.04 per ounce as of 9:22 a.m. ET (1422 GMT) on Tuesday and U.S. gold futures gained 0.3% to $2,625.00. Strong central bank purchases, geopolitical uncertainties and monetary policy easing powered safe-haven gold’s record-breaking rally in 2024, driving it to an all-time high of $2,790.15 on Oct. 31. Analysts expected the factors supporting bullion in 2024 to persist into 2025, though they also cited potential headwinds from Trump policies that could stoke inflation and slow Federal Reserve rate cuts. “Gold is in a secular bull market, but the direction of travel won’t be as one-directional in 2025 as in 2024,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. “Peak political fear is behind us following Trump’s decisive win… Central Bank buying trends will continue at a similar pace in 2025, but flows will remain more discreet given the threat of Trump tariffs on countries perceived to be actively de-dollarizing.” Bullion thrives in low-interest-rate environments, acting as a hedge against economic and geopolitical risks. The rally lost momentum in November as the dollar strengthened on “Trump euphoria”. “We think the gold bull market has taken a pause following U.S. presidential elections but should resume in 2025 underpinned by further deterioration in the U.S. labor market, still-high interest rates weighing on growth, and higher ETF demand,” said Tom Mulqueen, Metals Strategist at Citi Global Markets. Elsewhere, spot silver fell 0.5% at $28.78 per ounce, palladium rose 0.7% to $907.30, and platinum added 0.2% to $905.85. Silver is headed for its best year since 2020, having added nearly 22% so far. Platinum and palladium are set for annual losses and have dipped over 8% and 18%, respectively. Citi’s Mulqueen sees silver prices rising to $36 per ounce in response to a large market deficit and to Fed rate cuts through 2025. Citing headwinds for industrial demand growth in 2025, he did not expect it to outperform gold.”
On the day gold closed up $23.10 at $2629.20, and silver closed down $0.17 at $28.94.
On Wednesday (January 1st) we are closed. Wishing you all a great New Year!
On Thursday the price of gold climbed to daily highs of $2659.00 on the open so bulls took the first optimistic step into the New Year. This pop to the upside happened despite a stronger dollar as the Dollar Index moved from 108.5 through 109.50 in the early trade. But I would not get too excited here, there are plenty of bullish and bearish crosscurrents going into 2025. The technical guys are calling $2960.00 or higher a “buy zone” and anything below $2645.00 a “sell zone”.
Consider something more generous for the physical market. This past month gold has moved from highs of $2720.00 through lows of $2580.00. Investors should use a middle ground number of $2650.00. Now add $50.00 for upside action ($2700.00) and subtract $50.00 for downside action ($2600.00). You will then have a reasonable guess presenting a wider target. There is no guarantee in this mixed bag, but such an approach may help eliminate some of the expected “whipsaw” action during this transition. At this point I still believe that gold has more upside than downside because the FOMC should remain dovish as we move further into 2025.
Reuters (Sherin Elizbeth Varghese and Anjana Anil) – Gold climbs to two-week high on safe-haven demand, weaker yields – “Gold hit a two-week high on Thursday, fueled by safe-haven buying and a dip in U.S. Treasury yields, while the market took out positions ahead of the Federal Reserve’s rate outlook and President-elect Donald Trump’s looming trade tariffs. Spot gold rose 1% to $2,649.73 an ounce by 9:47 a.m. ET (1446 GMT), hitting its highest since Dec.18. U.S. gold futures gained 0.8% to $2,663.20. The benchmark U.S. 10-year bond yield slipped, making non-yielding bullion more attractive for investors. “I can’t see anything market-moving in the news, but geopolitical forces (international tensions as well as financial uncertainties, not less ahead of the inauguration of President-elect Trump) are supportive,” said StoneX analyst Rhona O’Connell. Bullion thrives in low-interest-rate environments and acts as a hedge against economic and geopolitical risks. Russia launched a drone strike on Kyiv early Wednesday, causing damage in at least two districts, while the Israeli military struck a suburb of Gaza City. Traders await next week’s U.S. job openings data, the ADP employment report, the Fed’s December FOMC meeting minutes, and the U.S. employment report to gauge the interest rate outlook for 2025. In 2024, rate cuts, central bank buying, and geopolitical tensions drove gold to record highs with a an over 27% annual gain, its best since 2010. “Corrections or consolidations in the early part of the year could set the stage for a renewed rally,” Fawad Razaqzada, market analyst at Forex.com. said, adding that a gold price target of $3,000 an ounce was feasible. “The unwinding of the ‘Trump trade’ – a phenomenon characterized by a strong U.S. dollar and robust equity markets – could weaken the dollar and bolster gold prices.” Trump’s upcoming inauguration on Jan. 20 has heightened uncertainty, with his proposed tariffs and protectionist policies expected to be inflationary, potentially sparking trade wars. Among other metals, spot silver rose 2.1% to $29.48 an ounce, palladium gained 1.3% to $922.04 and platinum climbed 2.1% at $922.85.”
On the day gold closed up $29.70 at $2658.90, and silver closed up $0.68 at $29.62.
On Friday the price of gold dipped to a session low of $2635.00 as the dollar gained strength in the early trade. This will discourage somewhat bullish sentiment after yesterday’s nice pop to the upside. But it does reinforce the notion that gold’s price, at least in the next few months, is still undecided. These crosswinds are well known – the Trump “factor” is still being sorted out by traders and the world geopolitical situation remains uncertain.
From the technical standpoint gold remains bullish and silver bearish. The Dollar Index has moved a full four points higher this month presenting a powerful negative drag on both gold and silver. But most expect interest rates to continue lower, perhaps at a slower rate pushed by the latest FOMC assessment. At best investors are looking at a mixed bag for the New Year. Across our trading desk the volume numbers have slowed. Which may be an early sign that the physical trade is still looking for fresh data to provide a clearer interest rate picture.
Reuters (Sherin Elizabeth Varghese) – Gold slips from three-week high as strong dollar weighs – “Gold prices retreated from a three-week high on Friday, pressured by a robust dollar, while markets braced for potential economic and trade shifts under U.S. President-elect Donald Trump. Spot gold eased 0.3% to $2,649.29 an ounce at 09:37 a.m. ET (1436 GMT), after hitting its highest level since Dec. 13. Bullion is up about 1.1% for the week so far. U.S. gold futures were down 0.2% at $2,663.70. The new president’s agenda that supports higher tariffs has boosted the dollar and created significant underlying pressure on metal markets, said Nitesh Shah, commodity strategist at WisdomTree. The dollar index (.DXY) was set for its strongest weekly performance since mid-November, making gold pricier for overseas buyers. “For most of the metals, the slowing of global trade has typically been coupled with a slowing economy and therefore slowing demand for metals,” Shah said, referring to the potential impact of Trump’s proposed trade tariffs. A headwind from a stronger dollar is likely to persist for gold, but it looks like debts will continue rising in the U.S. and other countries, and geopolitical issues aren’t going to end soon, so it should stay supported, he added. Trump is set to take the oath of office on Jan. 20. His proposed tariffs and protectionist policies are expected to fuel inflation. This could slow the U.S. Federal Reserve’s interest rate cuts, limiting gold’s upside. After three rate cuts in 2024, the Fed projects only two reductions in 2025 due to persistent inflation. Gold, which thrives in low-rate environments, is currently benefiting from seasonal demand. “January has been consistently seeing the best price gains over the last 20 years as investors and asset allocators open fresh new long positions, coupled, of course, with good jewelry offtake for the festive season,” independent analyst Ross Norman said. Spot silver rose 0.8% to $29.82 per ounce, platinum added 1.4% to $937.65, and palladium gained 1.4% to $924.20.”
On the day gold closed down $13.90 at $2645.00, and silver closed up $0.19 at $29.81.
Platinum closed up $25.70 at $934.60, and palladium closed up $10.40 at $915.60.
Jim Wycoff (Kitco) – “Technically, February gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $2,565.00. First resistance is seen at the overnight high of $2,681.00 and then at $2,700.00. First support is seen at $2,650.00 and then at Thursday’s low of $2,636.10. March silver futures bears have the overall near-term technical advantage. A nine-week-old downtrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $31.00. The next downside price objective for the bears is closing prices below solid support at the August low of $27.39. First resistance is seen at last week’s high of $30.485 and then at $31.00. Next support is seen at the overnight low of $29.935 and then at the December low of $29.145.”
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