{"id":97736,"date":"2025-01-21T14:57:27","date_gmt":"2025-01-21T12:57:27","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=97736"},"modified":"2025-01-21T14:57:28","modified_gmt":"2025-01-21T12:57:28","slug":"gold-outlook-golds-upward-motion-maintained","status":"publish","type":"post","link":"https:\/\/www.ironfxcn.com\/th\/gold-outlook-golds-upward-motion-maintained\/","title":{"rendered":"Gold Outlook: Gold\u2019s upward motion maintained"},"content":{"rendered":"

Gold\u2019s upward direction seems to have survived Trump\u2019s inauguration yesterday and there do not seem to be any major financial releases<\/a> from the US that could shake gold\u2019s price until our next report hence we are to focus on gold\u2019s fundamentals for direction in the current report. For a rounder view, we conclude the report with a technical analysis of gold\u2019s daily chart.<\/p>\n\n\n\n

Trump\u2019s inauguration allows for gold\u2019s price to rise<\/strong><\/h2>\n\n\n\n

Trump\u2019s inauguration held only few surprises for the markets yesterday. Overall given the flamboyant style of the US President which the markets are accustomed to, the inauguration speech besides the usual mantra, may have been somewhat moderated. <\/p>\n\n\n\n

We do note his intentions to crack down on immigration, pardons for January 6th rioters, the reversal of initiatives for gender and race and highlight for market purposes two other issues. <\/p>\n\n\n\n

The first would be Trump\u2019s intentions to maximise oil and natural gas production and the second his intentions to apply tariffs on Mexico and Canada from February 1st onwards. <\/p>\n\n\n\n

Despite precious metals market analysts highlighting the possibility of safe haven inflows to have supported gold\u2019s price in the inauguration, the actual support gold\u2019s price enjoyed over the inauguration day was little. Hence, such safe have inflows may be possible in the future, may even be probable, yet are still to be seen.<\/p>\n\n\n\n

Gold\u2019s negative correlation with the USD<\/strong><\/h2>\n\n\n\n

If one compares the movement of the USD Index to gold\u2019s price over the past seven days we may conclude that he negative correlation of the USD with gold\u2019s price is in effect as the USD edged lower against its counterparts while precious metal’s price edged higher. <\/p>\n\n\n\n

Yet it seems that gold\u2019s price is unable to enjoy support to the full extent USD\u2019s weakening as gold\u2019s rise remains asymmetric if compared to USD weakening yesterday. <\/p>\n\n\n\n

Overall though we tend to see the case for precious metal’s price to be affected by the direction of the USD, something that was not in force in the past weeks. <\/p>\n\n\n\n

Should we see the USD regaining its confidence and start rising over the coming week, we may see gold\u2019s price weakening and vice versa.<\/p>\n\n\n\n

Also we note that US bonds have dropped over the past week, which in turn may have allowed for some support for gold\u2019s price to build up, given the negative corelation of US bond yields with precious metal’s price.<\/p>\n\n\n\n

Should we see a renewed fall of US bond yields in the coming week, we may see gold\u2019s price getting further support.<\/p>\n\n\n\n

The Fed\u2019s stance<\/strong><\/h2>\n\n\n\n

As for monetary policy we note that market expectations currently are for the Fed to cut rates again in the June meeting and is almost fully pricing in, according to Fed Fund Futures, that the bank will remain on hold in its next meeting on January 29th.<\/p>\n\n\n\n

We\u2019ll be having another report until then, yet we would like to note that with Trump now in office and given his intentions to crack down on immigration and impose tariffs on US imports from Canada and Mexico, we may see inflationary pressures in the US economy becoming even more persistent or even flaring up, which may in turn force he bank to adopt a more hawkish stance.<\/p>\n\n\n\n

Such a stance could support the USD and at the same time weigh on precious metal’s price.<\/p>\n\n\n\n

China\u2019s PBoC continues gold buying<\/strong><\/h2>\n\n\n\n

On a purely \u201cdemand and supply\u201d viewing of the gold market, we have to note that PBoC\u2019s gold buying spree which restarted in November, was continued in December and may very well be continued in the coming month. <\/p>\n\n\n\n

China\u2019s central bank seems to be trying to diversify its reserves by increasing the gold part, preparing for the possibility it needs to defend its currency in the international FX market yet at the same time may wish to further decouple from the USD. <\/p>\n\n\n\n

Should we see PBoC\u2019s gold buying spree being continued or even intensifying, we may see it having a beneficial effect for gold\u2019s price as the demand side of the gold market may tighten further.<\/p>\n\n\n\n

Gold Technical Analysis<\/strong><\/h2>\n\n\n\n

XAUUSD 4H Chart<\/strong><\/strong><\/h3>\n\n\n\n
\"XAU\/USD<\/figure>\n\n\n\n