Gold Prices Surge 31% in 2025 Amid Geopolitical Tensions and Rate Cut Expectations
Gold prices climbed to a two-week peak on Wednesday, buoyed by geopolitical tensions and rising expectations of a U.S. Federal Reserve rate cut.
Spot gold is trading at $2,684, supported by anticipation of a 25-basis-point rate reduction on December 18. Economists believe a cooling U.S. Consumer Price Index (CPI), forecasted at a 0.3% rise for November, could greenlight the Fed’s decision to ease monetary policy.
Kyle Rodda, a financial market analyst at Capital.com , commented, “An expected CPI number gives the Fed the green light to cut rates next week, which might catalyze gold’s next move higher.”
Gold thrives in low-interest-rate environments as the opportunity cost of holding non-yielding assets diminishes. Central bank buying has also propelled gold prices, with the precious metal up nearly 31% in 2024, on track for its best performance since 2010.
Geopolitical Risks Add Safe-Haven Demand
Rising geopolitical tensions continue to bolster gold’s safe-haven appeal. Recent Israeli military strikes on strategic weapon sites in Syria and ongoing turmoil in South Korea, including a police raid on the presidential office, have heightened investor unease.
Gold’s historical role as a hedge against uncertainty has further cemented its position as a reliable investment. Amid these risks, Goldman Sachs reiterated its bullish stance, projecting gold could rally to $3,000 per ounce by the end of 2025.
Key market drivers include:
Geopolitical turmoil: Escalating conflicts in the Middle East and South Korea.
Monetary policy: Federal Reserve rate cuts and global easing trends.
Central bank activity: Strong demand for gold in 2024.
Technical Outlook: Bullish Momentum Above $2,676
Gold broke out of a symmetrical triangle pattern at $2,676, signaling bullish momentum. Immediate resistance lies at $2,704, with further targets at $2,720 and $2,749. Support is established at $2,655, aligned with the 50 EMA, and $2,638.
The RSI at 60.72 suggests gold may consolidate before further gains. Sustained movement above $2,676 could pave the way for a rally toward $2,749.
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