Gold has been one of the most trusted assets of all time. Prices have increased over the last few years. It seems that gold is still one of the most attractive investment opportunities for traders. So what’s in store for gold?
Key facts on the gold price forecast
XAUUSD has recently skyrocketed above the record price of $2 525 an ounce. Experts suggest that this trend will carry on. Read a recent pre-NFP forecast by FBS.
There are several key factors to keep in mind when it comes to the gold price forecast.
Lower yields and increasing interest from Western investors will probably raise the gold prices further.
Major banking companies, including Bloomberg and UBS, predict a further rise. Some analysts expect gold to reach $2 700 an ounce.
Gold has always been a safe option in times of economic uncertainty. One of the main goals for investors is stability in volatile markets.
XAUUSD technical analysis gives you invaluable tools to understand market movements better. It’s important to watch the asset’s support and resistance levels closely. The support level indicates when the traders tend to purchase and the price usually stops falling. The prices are likely to fall at a resistance level.
Here are some tips on how to do the analysis.
Analyze the higher timeframes (daily, weekly). They often reveal stronger retracement levels, which may strongly affect price changes.
Move to lower timeframes (30-minute, 10-minute). This will help improve your analysis and identify key levels.
Assess the risks. Make sure you have a fallback plan that will help protect your assets.
Also, you want to gauge market (or investor) sentiment. That’s the mood of investors regarding a stock or an industry. Some investors can become emotional, which can sometimes affect the trends, so you need to monitor that as well. The indicators are more reliable when you analyze a higher timeframe.
The most common indicators are moving averages (MA), the relative strength index (RSI), and the money flow index (MFI). Each of them will give you valuable insights into investor sentiment. For example, the momentum oscillator can measure the strength of a trend. The RSI and MFI are very useful for spotting overbought or oversold conditions. This information can help traders predict the potential rise or fall of trends.
Price reaction to the Golden Fibonacci Ratio
The diagram shows how Fibonacci retracement levels can help traders find possible reversal points. This tool helps spot where the price may face support or resistance. These levels make the trend clearer. Also, they help traders choose better entry or exit points based on price movements.
Fundamental analysis
There are a few important factors that influence gold prices. To name a few, there is central inflation, the state of the economy, and the value of the currency.
Unemployment rates and GDP growth play a major role, too. When inflation rises, the US Federal Reserve lowers interest rates. If interest rates are low, assets offer lower returns. This makes gold more attractive to investors because it can protect their wealth. It is a safe investment during tough economic times or when other investments are losing value. That’s why gold prices often increase when there are economic troubles or interest rates are lower.
Recently, inflation in the US has been decreasing, with prices for goods and services leveling out. Lowering interest rates is now being considered. When interest rates go down, the US dollar weakens and gold prices rise.
The graph shows that the percentage change lowered from 9% to 3% in 12 months from July 2022 to July 2023.
12-month percentage change, consumer price index by the US Bureau of Labor Statistics
Investors choose gold as their asset in times of financial insecurity and regional conflicts. It’s a safe option to protect their wealth. This factor alone can increase gold prices. Another factor is central bank policies. The more gold global central banks buy, as they did recently, the higher the prices.
For example, Russia and China are two countries that bought the most gold from 2013 to 2023. Their gold reserves increased by 1298 and 1181 tons, respectively. The third biggest gold buyer, Turkey, is far behind with its 424 tons. These statistics give another insight into the rise of gold prices.
Countries that have been buying physical gold most actively from 2013 to 2023 — VisualCapitalist data
Market sentiment analysis
Market sentiment is a very important factor in gold pricing, as it reveals a lot about the attitude of investors. Sentiment is influenced by a group of factors, and is often closely connected to macroeconomic events and geopolitical risks.
We mentioned investor sentiment in the context of technical analysis, but this is different. Sentiment is a psychological indicator, as it shows what customers think. Technical indicators show the bigger picture and use more data.
Bearish and bullish are the two types of market sentiment, and an investor should monitor them. If the prices are expected to go up and investors are optimistic, it is bullish. When investors think that the prices are going to fall, it is called bearish.
The gold market has clearly been bullish recently. The prices sky-rocketed because of renewed interest from Western investors. Political conflicts, economic instability and the upcoming US presidential election increase the demand for gold. Investors avoid risk when the market is volatile, so they choose gold.
Factors influencing the price of gold
Key factors impacting gold prices
Supply and demand A key factor in forming the price of the precious metal is the balance between supply and demand. Gold is not just a speculative investment, but has many important industrial uses. Gold is used in electronics, jewelry, medicine, and aerospace, to name just a few industries. When there is a demand for these products, it can push gold prices higher. Also, growing interest from investors and large central bank purchases drive up demand, which contributes to rising prices. Supply can’t match demand? You can be sure gold prices are going to increase.
Geopolitical tensions and economic instability Military conflicts and increasing inflation affect gold prices as well. For experienced traders gold is the safest asset in times of instability. It is their preferred method of protecting their capital and making the most of it.
Currency movements and inflation rates Gold’s price is also affected by currency movements, especially the US dollar. When the US dollar weakens, gold becomes cheaper for people holding other currencies, which increases demand and raises prices. Also, rising inflation makes traditional currencies less valuable over time. What is the solution? Choose gold. For investors, it is a way to protect their money from inflation.
The latest developments in the gold market
Gold prices have risen steadily. Why? Because of strong purchases by central banks and growing interest from investors in both Asian and Western markets. Other factors work for gold, too. The US dollar is weakening, Treasury bond profits are going down, and the Federal Reserve is expected to cut rates. All of these shifts make experts optimistic about the gold market. Analysts from BofA and UBS predict further growth. The forecasts suggest that the prices could rise to $2 700 per ounce.
Technical analysis of gold (XAUUSD)
XAUUSD chart
Let’s look at the higher timeframe — daily. Technical analysis says that this pattern predicts a bullish-to-bearish trend reversal. The price corrected at the important resistance level of 2525.
US dollar chart
The %R oscillator shows that the security is trading above its fair value because of strong demand. The US dollar broke above the trend line and may put further pressure on gold.
Gold prices may drop back to 2450, but in the medium term, the demand for gold will not weaken. It will remain strong and reach 2680 — the 261.8 Fibonacci level.
What will happen to gold prices in 2024-2025 according to technical analysis?
XAUUSD long-term analysis
A long-term look at gold shows that it is currently moving within a pattern that often hints at future price movements. The %R (Williams %R) and RSI (relative strength index) can reveal a lot about the situation. They are signaling that gold might be overbought, which means its price can be corrected.
There are two possible scenarios. If gold breaks through the resistance level of $2 525, the current upward trend may continue. In that case, the next target for gold prices will be $2 720. This matches with a key technical point that traders use to predict price movements.
The second scenario will play out if gold drops below the lower boundary. The price can go down to $2 300. Some analysts think that this setback could be temporary. The prices could rebound to $2 720 as well.
Expert forecast for gold prices in 2024-2025
Experts from leading financial institutions expect gold to go up in price over the next two years. Gold has reached the record price of $2 500, but there is more to come. Analysts suggest the yellow metal can reach $2 700. Leading experts also predict the increase up to $2 600 by the end of 2025 on the back of central bank purchases and expected Federal Reserve rate cuts.
Amid fraying geopolitics, increased sanctioning, and de-dollarization, we observe an increased appetite to buy real assets, including gold,” said Gregory Shearer, head of base and precious metals strategy at J.P. Morgan.
Analysts from FBS share this bullish outlook. They predict that strong demand will drive the prices up even more. Their technical analysis suggests a target of $2 720 in the near future.
Expert Forecast for Gold Prices for 2025-2030
Forecast for gold prices in 2025-2030
A long-term forecast is always harder to make because of unpredictable markets and global events. However, there are signs that this trend might continue. Experts predict the yellow metal to pass the $3 000 mark. The Central Bank is buying gold, which will in itself lead to rising prices.
Let’s have a look at the technical analysis. It explains the likely tendencies of gold prices in the future.
If you examine the 30 day timeframe, you will see that gold is close to the resistance level. The rise might stop for some time. If the price continues to grow, it could hit $3 350. If not, the price will drop to the fair value gap (shown on the graph). The price will stabilize and then grow again to the target number of $3 350.
One way or the other, the forecast is positive for those willing to invest in gold. It is a well-established asset, and traders rely on it as a safe haven. This and currency inflation will certainly help the precious metal go up.
Should you invest in gold now?
So, to trade or not to trade? Consider these things before you decide:
Economic conditions. In the current economic situation, investing in gold is profitable. The increasing interest of both Western and Asian investors, as well as economic and social unrest, give a positive outlook on the gold market.
Diversification. Gold can be used to diversify your portfolio and lower investment risks.
Long-term vs. short-term profit. The prices can be changeable in the short term. But in the long run, gold can be a valuable asset.
According to the analysts, this positive trend will most likely continue. However, investing strategy is important. Assess the risks, plan ahead, and make informed and balanced decisions based on your financial goals.
