- Gold prices have experienced a significant increase of 6% since November, signaling a sustained upward trajectory.
- The recent surge in China's gold buying has contributed to this positive trend, elevating prices beyond $2,600.
Since November, gold prices have recorded an impressive 6% increase, reaching the notable mark of $2,700 per troy ounce. This upward momentum has been bolstered by China's latest reports of economic expansion.
China's Influence
The People's Bank of China has restarted its gold purchases after a six-month hiatus, boosting its reserves from 72.80 million troy ounces in October to 72.96 million troy ounces in November. This strategic move has heightened expectations for increased demand in 2025, pushing XAU/USD upward from $2,600.
According to the latest data from the World Gold Council, China now ranks 5th globally in gold reserves, holding approximately 2,264 tonnes as of Q3 this year. Thus, China's commitment to enhancing its gold purchases is a crucial factor influencing demand dynamics for the coming year, potentially sustaining gold's upward trajectory as the Asian powerhouse continues its acquisitions.
Table of Gold Reserves by Country: Q3 2024
Source: Gold.org / Data: IMF, World Bank
Gold as a Safe-Haven Asset
Gold continues to maintain its status as a prominent safe-haven asset, which drives central banks to bolster their reserves. This role is particularly evident during global crises that impact economic behavior. Presently, we are witnessing significant developments, such as a power transition in Syria, political instability in France, and the introduction of a new tariff package following Trump's return to power.
These occurrences have sparked an increased demand for gold in recent trading sessions. As such events persist, gold could find a strong catalyst to hover above the essential threshold of $2,000 per ounce.
Gold Technical Outlook
Gold prices have been on a steady incline since mid-February, with a remarkable 40% increase, nearing the $2,800 per ounce mark. Recent fluctuations have brought prices back to the significant $2,700 level.
Source: Tradingview
- Neutral Indicators: For more than 15 days, the ADX indicator line has consistently declined, now resting below the 20 level, indicating that average volatility over the last 14 sessions remains neutral, which limits the strength of the bullish trend. Consequently, a lack of buying momentum is anticipated in the near future.
- Triangle Formation: The recent movements have illustrated a triangle formation on the daily chart, characterized by reduced volatility compared to previous weeks. It is essential to observe the upper and lower boundaries defined by the triangle's convergence at this stage.
The upper boundary serves as a significant resistance point for gold at $2,700; surpassing this level could trigger short-term bullish movements. Conversely, the lower boundary is positioned around $2,600, where bearish shifts near this level could disrupt the continuity of the existing trend.
- Key levels:
- $2,800: This critical resistance zone correlates with the all-time peak price. A breach of this level could reinforce the long-term bullish outlook and support ongoing buying sentiment.
- $2,500: The most crucial support level on the chart; breaking through this level may jeopardize the current bullish momentum and solidify bearish positions.
