After rebounding last weekend, gold has started to actively strengthen in this weakness that was shortened due to holidays. There are not many catalysts driving gold in a specific direction for the rest of this year, but the effects of monthly, quarterly, and year-end factors may lead to some fluctuations.
Following a strong uptrend that began in February and ended in October, gold is causing mixed emotions for investors as 2024 draws to a close. This means that at least the short-term bullish momentum has dissipated.
In terms of percentage increase since the beginning of the year, precious metals have managed to keep pace with major stock indices such as the Nasdaq 100. As of the beginning of the year, spot gold has risen by approximately 26.87%.
Looking ahead to 2025, analysts believe that gold may find it more challenging to continue its bullish pattern, but ultimately rising to $3000 remains the basic forecast scenario, especially if it can break through the long-term 'bullish flag' pattern upwards.
Possible factors that may hinder the rise of gold prices
Central banks around the world played a key role in the rise of gold prices in 2024, as global interest rate cuts stimulated demand. However, persistent inflationary pressures have prompted the Federal Reserve, European Central Bank, and Bank of England to remain cautious. Due to the continued stickiness of inflation, particularly the focus on strong wage growth, it is expected that monetary policy will remain tight in early 2025.
This cautious stance supports the rise in bond yields and the strength of the US dollar - two major obstacles for gold. Higher bond yields increase the opportunity cost of holding non yield assets such as gold, while a strong US dollar makes gold more expensive for international buyers.
Unless central banks around the world actively shift towards loose policies, the upward space for gold prices in the first half of 2025 may be limited. In addition, the economic weakness of major Asian countries is not a good sign considering that they are the world's largest consumers of gold.
But the long-term fundamentals still have support - could it reach $3000 by 2025?
Despite short-term challenges, the $3000 gold price target is still feasible. Early 2025 may bring about adjustments or consolidation, but it may attract bargain hunters and long-term investors seeking bargain buying, especially those who missed out on the 2024 gold price rise.
This new interest may lay the foundation for an uptrend later in 2025, by which time the US dollar may have peaked. If the gold price undergoes a significant adjustment, central banks around the world may also slow down their gold purchasing pace and become buyers again by the end of 2024.
In addition, amidst inflation concerns and geopolitical tensions, the attractiveness of gold as a means of preservation remains strong. Whether it is the Middle East conflict or changes in global trade policies, these factors may boost safe haven demand and provide additional impetus for gold. These factors can at least partially offset the weak demand in major markets such as China or India.
conclusion
Therefore, although recent obstacles such as strong yields and a strong US dollar may put pressure on prices, the long-term outlook remains constructive. For investors and market observers, gold continues to shine as an important asset in an uncertain world.
