Gold price dips to $2,633 amid long-term bullish outlook
Goldman Sachs observes 40% surge in gold prices since 2022 amid global reserves diversification
Gold prices have been oscillating within a tight $20 range between $2,655 and $2,635 per ounce since Tuesday, reflecting muted volatility in recent sessions. While gold remains 28% higher year-to-date, the rally faces headwinds from a stronger dollar and stabilising labour market data.
Broader market dynamics further complicate the outlook. Gold has dropped more than 5% to date from its all-time high in October peak, primarily driven by a resurgent dollar following easing geopolitical tensions and a rally in the greenback after Donald Trump’s election victory. Yet, the metal’s long-term prospects remain robust, underpinned by persistent central bank buying and expectations of falling US interest rates into 2025.
Goldman Sachs notes 40% surge in gold prices since 2022
Goldman Sachs notes an extraordinary shift since 2022 when Western sanctions froze Russian central bank assets, prompting global reserves to diversify into gold. This demand has driven a remarkable 40% price surge since early 2022, defying the traditional inverse relationship between gold prices and interest rates.
Gold price dynamics (November-December 2024). Source: TradingView.
The $2,655 resistance is currently reinforced by the 200-period EMA on the 4-hour chart, a critical technical level gold has struggled to breach. Over the past six days, gold’s price action has shown a slight bullish bias, supported by a rising trendline that now converges with price near $2,633. If gold finds support at this level, a rebound toward higher prices could materialise, breaking out of its current consolidation phase. Conversely, the RSI indicator is below 50, adding bearish weight to gold outlook. A decisive decline below the $2,633 trendline could see the metal retesting $2,600 per ounce, a level it last touched two weeks ago.
Looking ahead, Friday’s US nonfarm payrolls data could provide fresh clues for the Fed’s December meeting, where a 25-basis-point rate cut is widely anticipated. If rates decline further, central bank demand and reduced opportunity costs for holding gold may support a continued rally into 2025.
Gold prices have been confined to a tight range between $2,600 and $2,670 per ounce. Stronger dollar and uncertainty over U.S. interest rates are keeping gains in check.
