May 26, 2025
24 Comments Investment Topics

Gold Rises to $2,938

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As of February 14, the gold market has once again captivated the attention of investors around the worldAfter enduring several fluctuations, the metal's price has shown a persistent upward trajectory, gearing up for what could be its seventh consecutive weekly gainOn this particular day, gold prices displayed solid resilience, increasing by 0.28% and reaching $2936 by the time of this reportThere was even a moment during trading when gold almost hit the historic peak of $2942.70 set just earlier, enticing global investors with the prospect of further increases.

Analysts, such as those from forexlive, have pointed out that economic data has played a pivotal role in gold's price movementsA recent report on the U.SProducer Price Index (PPI) exceeded expectations, a point of keen interest for the market; however, more eyes turned to the details behind the core Personal Consumption Expenditures (PCE) Index, a crucial metric for the Federal Reserve's monetary policy decisionsSurprisingly, these details were rather subdued, leading to a downward revision of the early estimates of a more vigorous growth

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Current projections suggest that the year-on-year growth for core PCE might fall to 2.6%, a decrease from the previous 2.8% — a scenario that certainly will provide some relief for the Federal Reserve.


The implications of these dynamics were further compounded by a significant policy announcement from the new U.S. administrationA decision was announced that required the economic team to develop plans for implementing retaliatory tariffs on all countries that impose tariffs on American products, including major economies like Japan, South Korea, and the European UnionThis news sparked immediate tension in the markets, with Ajay Kedia from Kedia Commodities emphasizing that a key driver for rising gold prices has indeed been this announcement of potential tariffs, likely to have profound effects on the global economy.

However, Kedia noted a cautionary point: the market appears somewhat overboughtAs gold approaches the psychologically significant $3000 level, there might be some technical profit-takingHistorically, when the market moves upward, a portion of investors seeks to secure their profits, triggering possible short-term corrections in prices.

Reuters also conducted an analysis of the market dynamics, revealing that the data released indicated an appreciable rise in the U.SProducer Price Index in January, while Wednesday's inflation report showed that consumer prices surged at their fastest rate in a year and a halfThe sharp rise in PPI reinforces the evidence that inflation might hopefully re-accelerate, solidifying market speculation that the Federal Reserve will not lower interest rates until after the second half of this year

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In this climate of rising inflation expectations coupled with stable rate predictions, the safe-haven and store of value narrative for gold grows ever stronger.


Traditionally, gold is viewed as a hedge against inflation and economic uncertainty; yet, the rising interest rates can detract from the allure of this non-interest-bearing assetIlya Spivak, head of global macro at Tastylive, mentioned that if robust data leads to a scenario where the Federal Reserve cannot lower rates this year, it could contribute to a drop in gold pricesNonetheless, given the current market circumstances, such a situation appears unlikely in the immediate future.

From a technical analysis perspective, the gold market exhibits pronounced trendsA daily chart reveals that prices remain supported, inching closer to fresh historical highsEvaluating risk management, buyers eye entry points around the $2790 mark for a favorable risk-return setup; entering at this level allows for substantial upside if prices continue to ascend, while the risk remains manageableMeanwhile, sellers are closely monitoring whether prices dip below this threshold; should this occur, their next target would be key support around the $2600 mark.

On the four-hour chart, a minor ascending trend line distinctly outlines the current bullish momentumIf prices correct towards this trend line, it is anticipated that buyers will leverage it for further gains, pushing for new highsOn the flip side, sellers await to act if the trend line breaks below; such a breach would invite additional short-selling positions.

Zooming into the one-hour chart, a minor support zone emerges near the $2922 level

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