January 2025 will be the ultimate test for the gold market: if gold continues to trade within a narrow range, it would be the ultimate confirmation of gold’s secular bull market. So far, the gold price remains stable.
READ – Gold Prediction 2025 and Beyond
While it is interesting to read the daily gold headlines, they do not really help in understanding the trend:
Gold prices fall as interest rates rise, US economic data market data (January 6)
Gold pares gains as dollar recovers after US jobs data (January 7)
Gold rises on weaker-than-expected private payroll data (January 8)
Let’s look at the message of the graph(s) to understand the trend(s).
USD strong – gold price stable
By far the most important cross-market play for gold is the USD (followed by interest rates, see next section).
As seen below, the USD is super strong, up 9,300 points in a span of two months.
Amazing!
Gold is holding up surprisingly well in this environment.
We expect the USD to find resistance at the 25% Fib level, which is 110 points, or eventually closer to 114 points. The USD should be close to resistance. If the USD continues to rise above 114 points, which seems unlikely, all markets and metals will face significant challenges.
Gives strength – gold price stable
Similarly, returns rose significantly: from 3.6% to 4.6% in three months.
Same story: the gold price remained stable given this phenomenal increase in interest rates.
What is causing the USD and interest rates to rise so much?
Most likely it is the expectations of more inflation as a result of government policies according to Trump 2.0.
So the real question is what the real price is, because that is what gold is so sensitive to. Given the stable gold price, as shown below, the answer is that the market believes that the real interest rate will somehow remain stable despite the huge increase in the USD + interest rate.
Relative strength of the gold price on the gold chart
That’s a pretty interesting and fascinating gold price chart considering the strength of the USD + interest rates.
The gold map contains a number of insights worth considering:
- Time – January 2025 marks the midpoint of the current three-month cycle. So far this has not been a negative cycle. It looks like this statement will hold up.
- Price – we wanted gold to trade above $2650 on January 1, 2025. That happened too. The reason? See gold – this is where the long-term bull market will be confirmed.
- Gold respects its ascending channel, especially the median line.
As far as the environment goes, gold is holding up very, very well.
Even if gold were to fall, it still has a lot of room to worry.
Essentially, gold should stay within its channel AND trade above $2,650 on March 31, 2025 for a great long-term outcome. All data points currently suggest this will be the case.
Maybe, just maybe, the recovery of Chinese gold premiums could indeed portend a rebound in gold prices.