Gold prices rose in early Asian trading on Friday, continuing its upward trajectory. Demand has been bolstered by persistent central bank purchases and heightened global conflicts, specifically ongoing tensions within the Middle East and Eastern Europe.
Picture: Gold maintains bullish momentum as safe-haven demand and technical strength drive prices higher, as seen on the VT Markets app.
The session saw gold prices rebound sharply from an intraday low of $2,621.78, climbing to a high of $2,632.64. Strong buying interest at lower levels underpinned the rally with market participants holding onto the metal as a hedge against shaky global conditions.
Central banks worldwide have ramped up their gold acquisitions, recognising its value as a stable reserve asset. Gold’s continued upward trend throughout 2024 is expected to continue into the new year as inflation talk shapes the macroeconomic landscape.
The ECB, for example, anticipates hitting its expected 2% inflation rate for 2025, which will contribute to the global efforts to combat inflation.
The sustained buying from central banks may also be an effort to offset potential headwinds from the Federal Reserve’s cautious pace of interest rate easing.
While easing typically supports gold prices, the Fed’s restrained approach could cap gains by maintaining attractive real yields.
While gold enjoys strong support, challenges linger. The Federal Reserve’s measured easing stance may temper inflationary pressures, reducing some of the impetus for gold demand.
The Trump administration’s trade and fiscal policies could also introduce new variables.
Any aggressive stance on tariffs or spending cuts could shift risk sentiment and affect capital flows, indirectly impacting gold prices.
See also: EURUSD Dips on BOJ and Weak Chinese Data
Active market participants may look to capitalise on short-term dips near the support level while monitoring critical economic and political developments that could influence price movements in the months ahead.
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