Article by: ETO Markets
Gold markets face a complex macro environment dominated by evolving policy expectations and heightened geopolitical risks. Fresh escalations in the Russia-Ukraine conflict, marked by major reciprocal drone and missile strikes, have intensified ahead of Trump's inauguration, with reports of deepening Russia-Iran defence ties adding to market uncertainty. President-elect Trump's recent statements suggesting potential challenges in brokering Ukraine peace have further complicated the geopolitical landscape. On the monetary policy front, strong Q4 2024 GDP growth of 2.7% and moderating inflation expectations (core inflation projected at 2.6% for 2025) have led markets to price in a more gradual pace of Fed rate cuts than previously anticipated. Major financial institutions remain constructive on gold's outlook, with JPMorgan forecasting prices to reach $…/oz by end-2025, while Citigroup maintains a more bullish $…/oz target based on expectations of a weakening US labour market and the Fed's dovish pivot. Recent easing of Middle East tensions has temporarily dampened safe-haven demand, though institutional investors continue to view gold as a strategic hedge against policy uncertainty and geopolitical risks.
In a technical prospective, the gold market exhibits a clear technical structure with a series of well-defined support and resistance levels guiding price action. The 50-day moving average at $… provides primary support, align with mid-January swing low. A key pivot level at $…, established in late December and retested in January, marks the final significant support before deeper retracement. On the upside, immediate resistance stands at $…, marked by the recent swing high at $…, with declining volume suggesting potential for a breakthrough on fresh catalysts. A successful break above this level would target the all-time high at $…, where thin volume profile suggests potential for accelerated movement. The current risk-reward setup favours long positions initiated near $…, with protective stops below $… targeting an initial objective at $…, offering a compelling …:… reward ratio.
