After a record increase of 27% in 2024, gold continues to attract investors looking for stability. Between American monetary policy, economic uncertainties and international conflicts, deciphering the market dynamics of this precious metal.
Also read: The price of gold rising in 2025, discover this expert’s forecasts!
An exceptional performance in 2024
Gold (XAU/USD) starts 2025 on a positive note with a third consecutive session of gains. In 2024, this precious metal recorded remarkable growth of more than 27 %its best score since 2010. The main drivers of this performance include monetary easing in the United States, record purchases by central banks and lingering geopolitical tensions.
American monetary policy: a key factor
As the US economy faces uncertainties linked to the newly elected Trump administration, the Federal Reserve (Fed) is adopting a more cautious posture. If rate cuts are expected, the Fed could maintain a more restrictive policy, which could temper gold’s momentum.
At the same time, the US Dollar Index (DXY) fell from its recently reached multi-year high of 108.58, making gold, priced in dollars, more attractive to foreign investors.
International tensions: a driving force for gold
The conflicts in Ukraine and the Middle East continue to strengthen the role of gold as a safe haven. The latest report from World Gold Council highlights a likely increase in gold purchases by central banks in 2025. This dynamic could support prices in the short term.
In Ukraine, tensions remain high after a drone attack on kyiv, causing victims and significant damage. For its part, the conflict in Gaza continues, fueling uncertainty on global markets.
-The Chinese economy in support
Gold demand could also be influenced by the economic recovery in China. In his New Year’s speech, President Xi Jinping promised more proactive economic policies for 2025. Despite weak manufacturing growth in December, the services and construction sectors are showing encouraging signs.
Technical analysis: towards a psychological threshold at $2,700
On a technical level, the price of gold is consolidating around 2 630 $ per ounce. Technical indicators, such as the 9-day and 14-day exponential moving averages (EMA), show short-term bullish momentum. If this trend continues, the next target could be the psychological threshold of 2 700 $. Conversely, a pullback towards the EMAs at $2,626 and $2,624 could serve as support.
FAQ: Gold and Interest Rates
Do interest rates influence the price of gold?
Yes, high interest rates increase the opportunity cost of holding gold, generally depressing its price. Conversely, low rates encourage its demand.
Why do central banks buy gold?
Gold provides a hedge against inflation and currency fluctuations, while enhancing the stability of national reserves.
With current geopolitical and economic uncertainties, gold remains an essential value for prudent investors.
