Gold Shines Bright as China's Buying Spree Bolsters Prices

Gold prices are holding steady above $2,650 after China's central bank purchased more gold in December 2024. It hit a low of $2,614.90 on Monday and currently trading around $2,653.

China's Central Bank Resumes Gold Purchases

The Central Bank of China resumed gold buying after a six-month hiatus due to high prices. It increased the reserves for the second consecutive month in December 2024. Its holdings rose to 73.29 million ounces in December, up from 72.96 million ounces a month earlier. This is a step in line with China's efforts to diversify its reserves and reduce dependence on the US dollar, which has become a point of tension amid geopolitical tensions. Renewed demand for gold is coming as prices are at near record highs, fueled by central bank purchases worldwide and fears of inflation. Analysts have projected that this is going to bring the gold price to a $3,000 an ounce level by 2025. Such a strategy, while strengthening the position of China as a big gold buyer, enhances its influence in the world of global trade, which may, eventually, shake the US dollar hegemony.

Market Focus on Upcoming FOMC Meeting and Payroll Data

Market participants watch the upcoming FOMC meeting minutes and US Non-Farm Payroll data for further direction. According to the CME FedWatch tool, the probability of a rate pause has increased to 95.2% up from 90.40% a week ago.

Technical Analysis: Support, Resistance, and Trading Strategy

Gold prices are trading above both short-term and long-term moving averages confirming a minor uptrend. Immediate support is at $2,630, and a break below this level could lead to declines toward $2,620, $2,600, $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2,670, with potential price targets at $2,700 and $2,775. It is advisable to buy on dips around $2,630, with a stop-loss set at $2,600 and a target price of $2,725.