Home Forex XAU/USD Analysis Today – 25/01: When to Buy Gold? (Chart)

XAU/USD Analysis Today – 25/01: When to Buy Gold? (Chart)

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The probability of a rate hike in March rose to just over 50%, and the total number of basis points for rate cuts for the full year rose to 138.

  • The recovery of the US dollar brought new selling pressure to the gold market after the bulls failed to break above the resistance of 2038 dollars per ounce this week.
  • Today, gold price is stabilizing around 2012 dollars per ounce. In general, gold prices have had a tough start to 2024 and have failed to capitalize on the end-of-2023 rally.
  • Currently, financial markets are waiting to see if gold price can hold onto 2000 dollars per ounce. 

Today, the dollar price had retreated, perhaps due to comments from former St. Louis Federal Reserve President James Bullard, who said that he expects the Fed to start cutting interest rates before inflation reaches 2%, adding that this could be the case as early as March. Moreover, Investors added a few basis points of rate cuts to the table, but it wasn’t anything earth-shattering. 

The probability of a rate hike in March rose to just over 50%, and the total number of basis points for rate cuts for the full year rose to 138. Furthermore, the reason investors were not particularly shocked by Bullard’s nod to a rate cut in March may be that he is no longer a decision-maker. Additionally, they may have been hesitant to revise their view significantly before the preliminary January purchasing managers’ indices, as well as GDP and personal consumption expenditures inflation data, scheduled for release today and Friday, respectively. 

Meanwhile, even if the aforementioned economic data continues to indicate that the US economy can withstand higher interest rates for a longer period of time, the event that could decide the fate of the US currency in the near term could be the FOMC decision next week. On the global demand and supply front for gold, India raises import duties on gold and silver jewelry findings. 

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Moreover, the Indian government raised import duties on gold and silver used in jewelry manufacturing, and on precious metal coins to 15% from 11%, effective January 22, to bring them in line with the duties imposed on gold and silver bullion. In a notification issued this week, the Indian Ministry of Finance also raised import duties on consumer-oriented catalysts containing precious metals to 14.35% from 10.1%. Also, a government official said the move was aimed at preventing circumvention of customs duties on gold and silver bullion, after imports of gold findings, such as hooks, clasps, and other components used in jewelry manufacturing, rose in recent months. Finally, as is well known, India is the world’s second-largest consumer of gold, which is almost entirely supplied through imports. 

Technically, the failure of the bulls to push the price of gold above the resistance of $2038 per ounce, in addition to the gains of the US dollar, helped sell gold in strengthening it with losses that may approach the psychological level of $2000. Therefore, the strongest break in the general upward trend will be if it moves towards a deeper downward level, most importantly $1985 per ounce. Until now, we still prefer to buy gold from every falling level. On the other hand, according to the performance on the daily chart above, there will be no strong control for the bulls again without moving towards the resistance levels of 2055 and 2070 dollars per ounce, respectively. 

Today, the price of gold will be affected by the level of the US dollar and the extent of investors’ willingness to take risks or not, in addition to the reaction to the announcement of the European Central Bank’s policy and the reading of US economic growth. 

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