On Thursday, heightened geopolitical risks and uncertainty surrounding Trump’s upcoming inauguration fueled safe-haven demand, driving gold prices to a two-week high. Gold briefly crossed the $2660 level during the session before closing 1.29% higher at $2657.66 per ounce. Meanwhile, optimism about China’s economic outlook bolstered demand expectations, propelling WTI crude oil futures to intraday gains of over 2.8%.
Gold Market Overview
Gold prices rose sharply on Thursday, reaching a two-week high as geopolitical tensions and uncertainty surrounding President-elect Trump’s inauguration increased risk aversion. During the session, gold briefly surged past $2660 before closing at $2657.66 per ounce, up 1.29%.
Geopolitical Tensions
Geopolitical risks fueled the rally on the first trading day of the year.
- According to CCTV News, on January 1, Kyiv Mayor Vitali Klitschko reported that Russian drone attacks caused damage and fires in the city, resulting in casualties.
- Meanwhile, Russia’s Ministry of Defense announced that over 30 Ukrainian drones were intercepted over Belgorod, Kursk, and Rostov regions.
Market Uncertainty
Traders are also evaluating the Federal Reserve’s rate outlook and potential implications of Trump’s upcoming inauguration on January 20, when he will begin his second term. Markets are watching for his proposed trade tariffs and concerns over rising government debt driven by the US fiscal deficit.
2024 Recap & 2025 Outlook
Gold soared more than 27% in 2024, hitting record highs fueled by rate cuts, central bank purchases, and geopolitical tensions, marking its best annual performance since 2010. Fawad Razaqzada, a market analyst at Forex.com, believes gold could reach $3000 per ounce in 2025, adding that “unwinding the Trump trade could weaken the dollar and boost gold.”
Technical Analysis of Gold
Gold saw a strong breakout on Thursday, with prices staging a one-sided rally.
- During the Asian session, gold surged past $2630 and consolidated.
- The European session saw a brief pullback to test $2632 before resuming its upward momentum.
- In the US session, gold accelerated higher, breaking through $2640 and closing near its intraday peak above $2650.
The daily candlestick chart formed a bullish candle, indicating a strong upside breakout after two weeks of consolidation above $2580.
Today’s Focus & Strategy
- Trading Strategy: Prioritize long positions on pullbacks, with short positions on rebounds as secondary.
- Resistance Levels: 2668-2673
- Support Levels: 2645-2640
Crude Oil Market Overview
Crude oil prices surged on Thursday, supported by optimism about China’s economic outlook and stronger demand expectations.
- WTI February Futures: Rose $1.41 (+1.96%) to close at $73.13 per barrel.
- Brent March Futures: Gained $1.29 (+1.73%) to settle at $75.93 per barrel.
Key Drivers
- China’s Economic Policies: Expectations of more proactive economic measures in China lifted demand forecasts as investors returned from the holiday break.
- US Inventory Data: Data released early Friday showed that US crude inventories for the week ending December 27 fell less than expected, while gasoline and distillate inventories rose, tempering bullish sentiment.
Market Commentary
Tony Sycamore, a market analyst at IG, noted, “Traders are likely weighing multiple factors, including heightened geopolitical risks, Trump’s efforts to stimulate the US economy, and potential drag from proposed tariffs. The upcoming US ISM Manufacturing Data, due Friday, could provide further direction for crude oil prices.”
2025 Oil Price Outlook
Tony Sycamore, a market analyst at IG, noted, “Traders are likely weighing multiple factors, including heightened geopolitical risks, Trump’s efforts to stimulate the US economy, and potential drag from proposed tariffs. The upcoming US ISM Manufacturing Data, due Friday, could provide further direction for crude oil prices.”
Technical Analysis of Crude Oil
Oil prices extended their rally on Thursday, with a strong upward trend across all sessions.
- During the Asian and European sessions, prices climbed steadily, with WTI breaking above $73.
- In the US session, oil accelerated further, peaking at $73.7 before consolidating near the close.
The daily candlestick chart formed a bullish breakout pattern, marking the fourth consecutive day of gains and signaling strong upward momentum.
Today’s Focus & Strategy
- Trading Strategy: Prioritize long positions on pullbacks, with short positions on rebounds as secondary.
- Resistance Levels: 74.3-74.8
- Support Levels: 72.0-71.5
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Disclaimer
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