GLOBAL TRENDS WEEKLY

Gold Market Analysis Report

Date: January 17, 2025,
Prepared by: Patrick MontesDeOca
Target Audience: Gold Market Analysts, Traders, and Investors




Technical Analysis Overview

1. Current Market Position:
Gold futures are currently trading at $2,725.5, down 23.20 points (-0.84%). The market opened at $2,730, reached a high of $2,754.8, and a low of $2,715.6. Volume stands at 107,303, with open interest at 278,802, indicating sustained market participation.

2. Key Technical Indicators:

  • Simple Moving Averages (SMA):
    • 9-day SMA: $2,681.5 (short-term support)
    • 18-day SMA: $2,698.4 (near-term support)
    • 36-day SMA: $2,595.1 (mid-term support)
    • 54-day SMA: $2,494.5 (long-term support)
    • 90-day SMA: $2,340.5 (major trend support)
  • Bollinger Bands (20,2):
    • Upper Band: $2,791.6
    • Lower Band: $2,595.7
    • The price is currently trading near the upper half, indicating bullish momentum.

3. Fibonacci Retracement Levels:

  • 61.8%: $2,748 (key resistance level)
  • 50.0%: $2,703 (mid-range support)
  • 38.2%: $2,672 (critical support)

4. VC PMI Levels:

  • Sell 1 Daily: $2,763
  • Sell 2 Daily: $2,775
  • Buy 1 Daily: $2,734
  • Buy 2 Daily: $2,717

A break above $2,748 could lead to further bullish momentum, while a breach below $2,703 signals potential downside.

5. Momentum Indicators:

  • MACD (14,3,3): The MACD line is crossing above the signal line, suggesting bullish momentum is building.
  • RSI Analysis: Estimated around neutral (50), with upside potential above 60 signaling strength and below 40 indicating bearish conditions.

II. Fundamental Analysis

1. Interest Rates & Federal Reserve Policy:

  • Market sentiment remains influenced by potential rate cuts in 2024.
  • A dovish Fed stance could weaken the USD, boosting gold prices.

2. Inflationary Trends:

  • Persistent inflation concerns continue to drive demand for gold as a hedge.
  • Lower-than-expected inflation reports could limit gold’s upside.

3. Geopolitical Factors:

  • Ongoing conflicts and uncertainties contribute to gold’s safe-haven appeal.
  • Any resolution of geopolitical tensions could reduce demand.

4. US Dollar Strength:

  • The inverse correlation between gold and USD is crucial.
  • A weaker dollar supports gold, whereas a stronger dollar exerts downward pressure.

5. Central Bank Demand:

  • Increased gold purchases from China and India remain supportive.
  • ETF inflows have shown steady interest in the metal.

III. Reversion to the Mean and Probability Models

1. Mean Reversion Zones:

  • The short-term mean sits around $2,748, aligning with key resistance.
  • Buy zones around $2,717, with a probability of price retracing to equilibrium.

2. Trading Probabilities:

  • Bullish Scenario: A breakout above $2,748 increases the probability of reaching $2,775.
  • Bearish Scenario: A drop below $2,703 could trigger further declines to $2,672.

IV. Trading Strategy Recommendations

1. Bullish Strategy:

  • Entry: Near Buy 2 Daily at $2,717
  • Target: $2,748 (Sell 1 Daily)
  • Stop Loss: Below $2,703

2. Bearish Strategy:

  • Entry: Near resistance at $2,748
  • Target: $2,703 (50% Fibonacci retracement)
  • Stop Loss: Above $2,763

3. Risk Management:

  • Use trailing stops to protect gains.
  • Monitor RSI and MACD for confirmation of trend strength.

V. Conclusion and Outlook

Gold remains in a bullish trend, supported by key technical levels and fundamental factors such as inflation, interest rates, and geopolitical concerns. The near-term outlook suggests consolidation with a potential breakout above $2,748 or a pullback to $2,703 if selling pressure increases.

Traders should stay vigilant to macroeconomic developments and technical signals to capitalize on potential opportunities in both bullish and bearish scenarios.

Disclaimer: This analysis is intended for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consult with a financial advisor before making trading decisions.