Gold price pullback to be followed by recovery to 2815 level

Gold quotes on the last day of January set a new all-time high, rising to $2817 per ounce. However, the price failed to stay at this height, profit taking on long positions caused correction. Today the pullback continues, sellers' target may be testing the monthly uptrend line. Nevertheless, the bulls will surely try to seize the initiative in the range of 2770–2780 and drive up gold quotations.

The main reason for a decline in gold prices is a sharp strengthening of the dollar. The US currency is reacting positively to Donald Trump's decision to apply tariffs on imports of goods from Canada, Mexico and China. As JPMorgan experts warn, the bearish dynamics of the stock market may put pressure on gold in the short term. However, in the medium term, the current trade tensions support the growing trend in gold prices.

According to Bloomberg, the US President's actions have already caused a massive reallocation of gold reserves. JPMorgan, the world's largest dealer in gold market, is preparing to physically deliver more than $4 billion worth of gold bullion to its customers in February. This is the second-largest spot metal transaction in the last 30 years. Nearly $40 billion worth of gold bullion has been imported into the U.S. since the November elections, and the trend shows no signs of weakening.

Goldman Sachs analysts expect the increased demand for gold to continue. Gold is the best way to diversify an investment portfolio, ahead of all other commodities. Even excluding current situation, central banks keep gold consumption at a high level. The level of $3000 per ounce is getting closer. Its attainment is possible in the second quarter of 2025.

The local correction will help to unload the technical overbought condition on the RSI indicator. After that, gold quotes will return to growth, and the first target of buyers will be the mark 2815.

Consider the following trading strategy:

Buy gold in the range of 2770–2780. Take profit — 2815. Stop loss — 2760.