Gold (GOLD) is up by more than 1% today, driven by the weakness of the US dollar, weakening European macro readings and increased geopolitical concerns.
- The 10-year bond yields have fallen by 3 basis points to 4.21% and are now significantly lower compared to the 4.45% observed in mid-November. The situation on the Ukraine-Russia front may escalate as both sides attempt to gain an advantage before the likely start of negotiations in early 2025, following Trump’s inauguration.
- Signals from the Kremlin suggest Russia’s determination to maintain and capture as much territory as possible before any talks with the USA. Also, a peace agreement between Israel and Hezbollah appears unlikely; Lebanon has indicated that the IDF has violated the terms several times.
- The uncertain economic situation in China is partially driving an increase in demand for so-called safe-haven assets, while the Eurozone economy is experiencing a significant slowdown, with the potential to create conditions for a recession in 2025.
- As a result, uncertainty over the scale of policy easing in the US is being counterbalanced by a generally dovish stance in other economies, where consumption seems to be declining. The fading upward momentum in the US dollar, which is currently the weakest of the G10 currencies, is prompting investors to return to gold, given the higher risk of stagflation or recessionary scenarios materializing.
GOLD Chart (D1 Interval)
Gold has defended its 100-session moving average (EMA100) and is breaking out after completing the corrective scenario within the Head and Shoulders pattern (H&S). The key resistance at $2,600 per ounce (neckline and 23.6% Fibonacci retracement of the current uptrend) has been overcome, increasing the likelihood of new historical highs.
Source: xStation5
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