Profit taking pushes gold prices closer to 2670 level

Last week, gold prices attempted to maintain their monthly uptrend. The price reached the level of $2720 an ounce, but for the third time since the end of November, the breakout from below became an impossible task for the bulls. We are now witnessing a correction in the yellow metal's price, which has short-term potential as far as 2670. Today's events in the US could trigger the continuation of the pullback.

Financial market participants are awaiting Donald Trump's inauguration speech. It should clarify the new administration's policies and provide clues regarding the Federal Reserve's interest rate dynamics. Current analyst forecasts completely rule out the possibility of an easing at the 29 January meeting, but there is still a 30% chance of such a move at the March meeting. Statements by the new US president could dash these hopes and put pressure on gold prices.

Most experts expect gold prices to rise this year, but to a much lesser extent than in 2024. In particular, StoneX analysts point to the discrepancy between the steady strengthening of the dollar and the rise in the price of gold. These indicators historically move in the opposite directions and the restoration of this pattern could have a negative impact on the metal's price. It could fall as low as $2650.

The physical gold market is also seeing a cooling off in buyer interest. Last week, Indian dealers increased their discounts to a six-month high of $30 an ounce. On a weekly basis, the figure rose by $13, reflecting a drop in demand due to high prices. In addition, the Indian authorities may be reconsidering their July decision to cut import duties on gold by 9%. This move could further reduce consumption of the yellow metal in the country.

Consider the following trading strategy:

Selling gold at the current price. Take profit - 2670. Stop loss - 2720.