Gold Prices Gain 27% in 2024 Amid Geopolitical Tensions and Fed Policies

Gold prices have experienced a remarkable 27% rally in 2024, driven by a combination of geopolitical uncertainties, Federal Reserve policies, and market anticipation of significant policy shifts under President-elect Donald Trump.

As the precious metal closes the year, its performance has been underpinned by both its historical role as a hedge and evolving economic dynamics.

Gold hit an all-time high of $2,790.15 on October 31, propelled by the Fed’s aggressive monetary easing, including a 100-basis-point rate cut in September. The reduction in interest rates diminished the dollar’s appeal, giving non-yielding assets like gold a significant boost. Despite hints from the Federal Reserve about fewer rate cuts in 2025, gold has maintained its upward momentum, reflecting its safe-haven appeal in uncertain times.

 

XAU/USD

Key Drivers of Gold’s Performance

1. Geopolitical Uncertainty and Safe-Haven Demand

Geopolitical tensions have been a primary catalyst in 2024’s gold rally. Escalating trade disputes, inflationary fears, and global instability have encouraged investors to turn to gold as a store of value. According to Kelvin Wong, a senior analyst at OANDA, these tensions are likely to persist into 2025, providing sustained support for gold prices.

In addition, President-elect Trump’s proposed tariff policies, deregulation, and tax reforms are fueling expectations of market turbulence, further amplifying gold’s attractiveness as a safe-haven asset.

2. Impact of Federal Reserve Policy

The U.S. Federal Reserve’s decisions have played a pivotal role in shaping gold’s trajectory. The 100-basis-point rate cut this year has made gold more appealing by reducing the opportunity cost of holding non-yielding assets. However, with the Fed signaling a slowdown in rate cuts, gold may face headwinds in 2025.

For now, market sentiment suggests that gold could remain range-bound in the short term, especially as year-end trading volumes taper off.

Gold Technical Analysis and Key Levels

Gold is currently trading near $2,623, under pressure below the 50 EMA. The immediate pivot point at $2,628 serves as a crucial threshold for price action. A sustained move above this level could target $2,650, with further resistance at $2,669.

Conversely, immediate support lies at $2,608, followed by $2,588, where buyers might reenter. The RSI at 49.50 reflects a neutral stance, indicating that momentum is yet to decisively favor bulls or bears.

GOLD Price Chart - Source: Tradingview

Key levels for traders to watch include:

  • Immediate Resistance: $2,650

  • Next Resistance: $2,669

  • Immediate Support: $2,608

  • Next Support: $2,588

Outlook for 2025

Gold’s future depends heavily on how the market reacts to Trump’s policy shifts and the Federal Reserve’s monetary stance. If geopolitical tensions persist or intensify, gold could see renewed upward pressure. Meanwhile, stable interest rates could temper gains.

For now, the metal appears poised for a cautious start to 2025, with investors monitoring policy developments and economic data closely.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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