The gold market has recently shown impressive performance, climbing steadily toward historic highs. This upward trend is driven by several factors. First, with the Lunar New Year approaching, market interest in gold has been increasing. Gold prices have surged to $2,760 per ounce, marking a two-month high. Additionally, a weaker US dollar has significantly contributed to gold's rise. President Trump’s call for Federal Reserve rate cuts and uncertainties surrounding tariff policies have pushed the Dollar Index to a one-month low, making dollar-priced gold more attractive.

Inflation pressures have also re-emerged, boosting gold's appeal as a safe-haven asset. The Consumer Price Index (CPI) rose 2.9% year-over-year in December, further strengthening positive sentiment toward gold. Moreover, global central banks' gold purchases have played a role in the price surge. Since 2022, central banks have notably increased their gold reserves, with purchases reaching 2,700 tons by the end of 2024—a 15-year record high. Emerging market central banks, in particular, view gold as a primary stable reserve amid dollar instability.

Although technical indicators such as moving averages and the Relative Strength Index (RSI) suggest gold is overbought, market sentiment remains bullish. Technically, gold has broken through multiple key resistance levels, indicating strong bullish momentum. Recent price movements show a steady upward trend, with gold breaking the $2,726 double-top level on January 17, reaching a three-month high. It is now approaching the previous November resistance of $2,800. A short-term correction may occur before further gains, and investors are advised to be cautious about chasing highs.

In the near term, holding above $2,720 is crucial to setting the stage for further gains in the next month. The target is expected to reach $2,850–$2,900. Conversely, if gold falls below $2,687, the upward momentum may come to an end.

Hugo Leong

Gold Analyst of Hantec Group