Gold price slips 0.8% but retains 4.9% YTD gains amid weak treasury yields
Gold trades at $2,755 per ounce
Gold prices have been on an upward trajectory in January 2025, showcasing both remarkable highs and a recent tactical retreat.
After the recent peak at $2,785 per ounce last week, gold nearly touched its all-time high of $2,790 from October of the previous year, marking an impressive 6% rise for the month. However, today, Monday, January 27, saw gold prices dip by 0.8% in the Asian session, reducing year-to-date gains to 4.9%.
Currently, in the European session, gold trades at $2,755 per ounce. The decline comes in the wake of a modest recovery by the US Dollar (USD), which had its worst week since November 2023. This recovery has been a key factor in pressuring gold prices downward.
Gold price dynamics (October 2024-January 2025). Source: TradingView.
Yet, the fundamental backdrop remains favorable for gold bulls. Global risk sentiment took a hit due to U.S. President Donald Trump's decision to impose tariffs on all imports from Colombia, reigniting trade war concerns. This, coupled with expectations that the Federal Reserve might cut interest rates twice by the end of the year, has led to a decrease in US Treasury bond yields. The prospect of lower yields traditionally supports gold prices by making the non-yielding asset more attractive compared to interest-bearing investments like bonds.
Gold price outlook: Technical indicators suggest potential upside
Despite today's decline, technical indicators like the Relative Strength Index (RSI) remain in bullish territory on both daily and 4-hour charts. This suggests that the current retracement might be limited, with potential for gold to challenge its all-time high again. If gold sustains its decline, a key support level to watch is at $2,725, where some of last week's gains could be offset.
The combination of geopolitical tensions, monetary policy expectations, and technical analysis points towards a scenario where gold could see a resurgence. A close watch on further developments in US economic policy and global trade relations will be pivotal in determining whether gold can maintain its upward trajectory or if it will see further corrections.
The U.S. Dollar's dip to a monthly low led to a 0.46% rise in gold prices, nearing a record high.Gold’s rebound from Thursday’s slide resulted in its largest weekly gain since November 2024.
