Gold has been rising since Trump's inauguration, underscoring the public's lack of confidence in the stability of the economy in the face of changing economic policies. It rose from 2702.49 to 2750. Today's trading also started with gains.
Gold rose amid a weaker dollar and the introduction of Donald Trump's tariff plans as he entered his second term. Gold prices rose 2% on Tuesday, extending gains that began on Monday evening amid a weaker dollar.
Gold remains in demand as an inflation hedge amid economic uncertainty. However, Trump's inflationary policies could lead to continued high Federal Reserve interest rates, reducing the attractiveness of the precious metal. Further movement in gold prices will depend on the new administration's activity on economic initiatives.
China recently discovered 168 tons of gold in three mines, which could affect global inventories and put pressure on prices. At the same time, South Africa reported a decline in gold production from -3.4% to -11.5%, which could boost prices.
The Fed’s meeting is due next week on January 29th, where the Federal Funds rate is expected to remain at 4.25%-4.50% despite cuts in interest rates from September 2024. Higher interest rates reduce the appeal of non-yielding gold. Trump's future executive orders regarding the imposition of trade tariffs on goods from the EU and China could also have an impact. This also has the potential to increase inflation in the US and will result in the need to keep interest rates higher for a longer period of time. This in turn will reduce the attractiveness of gold as a hedging instrument.
The technical analysis shows the presence of an upward trend. The RSI near 70 indicates that the asset may be approaching an overbought condition, but the upward movement may continue if the resistance level is overcome. The MACD indicator is moving up, reflecting bullish momentum. If the price of gold overcomes the resistance level, it is likely to rise to a new high.
Current recommendation:
Buy in the range of 2707-2750. Take profit - 2790.07. Stop loss - 2696.
This content is for informational purposes only and is not intended to be investing advice.
