Gold Update: China's Stimulus Limits Bearish Action
- Gold prices have risen by 6% since November and continue oscillating within an upward trend.
- China has increased its gold purchases over the past month, creating a bullish factor that has pushed the price above $2,600.
Gold prices have shown a 6% growth since November, reaching the $2,700 per troy ounce level once again. The current upward trend has strengthened following recent announcements of economic growth from China.
China's Role
Recently, the People's Bank of China resumed its gold acquisitions after a six-month pause, increasing its reserves from 72.80 million troy ounces in October to 72.96 million troy ounces in November. This move has been a key catalyst for raising expectations of increased demand in 2025, pushing XAU/USD upwards from the $2,600 level.
The latest data published by the World Gold Council shows that China ranks 5th among countries with the largest gold reserves globally. During Q3 of this year, total reserves were reported at approximately 2,264 tonnes. For this reason, China's statements, and actions to increase gold purchases in the short term are key factors that could play an important role in demand development for the following year. That said, gold may maintain a solid upward trend as the Asian giant continues its acquisitions.
Table of Gold Reserves by Country: Q3 2024
Source: Gold.org / Data: IMF, World Bank
Gold as a Safe-Haven Asset
Gold remains one of the world's most prominent safe-haven assets, which explains the trend among central banks to increase their reserves. However, the safe-haven role, as its name implies, is tied to panic events occurring globally that can affect economic behavior. Currently, we observe a power transition in Syria, political uncertainty in France, and a new tariff package with Trump's arrival to power.
Such events have, to some extent, driven appetite for gold in recent sessions. As these types of events continue to appear, gold could find a significant catalyst to remain above the critical floor of $2,000 per ounce.
Gold Technical Forecast
Gold has maintained a steady trend since mid-February of this year, increasing in value by 40% and reaching a price near $2,800 per ounce. Recent events have brought the price back to the key $2,700 level.
Source: Tradingview
- Neutral Indicators: For over 15 days, the ADX indicator line has shown a consistent decline, now positioned below the 20 level. This indicates that the average volatility of the last 14 sessions is in a neutral zone, reducing the bullish trend strength. That said, a lack of buying momentum is anticipated in the upcoming sessions.
- Triangle Formation: Recent movements on the daily chart have followed a triangle formation, as recent sessions have exhibited smaller movements compared to previous weeks. In this context, it is essential to consider the upper and lower levels marked by the triangle's crossing lines at its endpoint.
The upper level represents a key resistance for gold at $2,700, and if surpassed, it could generate short-term bullish movements. Conversely, the lower level lies at the base of the triangle, around $2,600, where bearish oscillations near this level could break the continuation pattern of the current trend.
- Key levels:
- $2,800: A critical resistance zone corresponding to the all-time high price. Breaching this level could sustain the long-term bullish trend and maintain a buying perspective over time.
- $2,500: The most significant support on the chart, where a breach could jeopardize the current bullish trend and consolidate bearish positions.
StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.
This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.
FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.
FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.
© FOREX.COM 2024