Gold Surges Amid Safe-Haven Demand: A Technical Outlook

Gold gained above $2900 as demand for safe-haven assets increased. It hit a high of  $2930 and is currently trading around $2911.

Central Banks Temper Gold Buying

Central bank gold acquisition eased in January 2025, with a steep year-over-year decline of 60% to 18.5 tonnes, as 11 central banks actively purchased, the fewest since January 2021. Nonetheless, Uzbekistan and China remained key purchasers, adding 8 and 5 tonnes respectively to their respective reserves. This aggregate fall is part of a wider pattern of subdued activity in central bank gold purchases, though gold continues to be a strategic asset in the face of geopolitical uncertainties.

Factors Fueling the Price Surge

Increased gold prices are driven by a mix of factors. Uncertainty over trade tariffs, particularly the ones threatened by the US, drives demand for safe-haven assets such as gold as investors try to hedge against possible trade war risks. Fears of recession, fueled by weakening growth and softer jobs reports, also make gold more appealing as a hedge against economic slowdown. The Russia-Ukraine conflict escalated the geopolitical tensions, and central banks started stockpiling gold reserves as a strategic asset, especially since the 2022 Russian central bank asset freezing

Rate Pause Expectations Rise

According to the CME Fed Watch tool, the chances of a rate pause on the Mar 19th 2025 meeting have increased to 95% from 92% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above short-term moving averages 34 EMA and 55 EMA and above long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2880 and a break below this level will drag the yellow metal to $2867/$2850/$2830/$2800/$2770/$2740. The near-term resistance is at $2930, with potential price targets at $2940/$2957/$3000.

It is good to buy on dips around $2880 with a stop-loss at $2850 for a target price of $3000.