As we step into 2025, the outlook for gold remains decidedly bullish, following a remarkable year in which gold prices surged by over 27%. This performance marked the largest annual gain since 2010, and analysts are optimistic that the momentum will continue. Here’s why gold could be a compelling addition to your investment portfolio this year.

Strong analyst predictions

Major financial institutions, including JPMorgan and Goldman Sachs, have set ambitious price targets for gold, forecasting it could reach between $3,000 and $3,275 per ounce in 2025. These projections are driven by several key factors:

• Analysts anticipate that the Federal Reserve will implement additional interest rate cuts in response to economic conditions. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.
• Ongoing global uncertainties, particularly in the Middle East and trade policies under the incoming Trump administration, are likely to drive demand for safe-haven assets like gold. Investors often flock to gold during times of geopolitical instability, further supporting its price.
• Central banks worldwide have significantly increased their gold reserves in recent years. This trend is expected to continue, particularly from emerging markets, which view gold as a hedge against financial instability and currency fluctuations.

Market dynamics

Gold has started 2025 on a strong note, rebounding from key support levels around $2,600. Despite a robust US dollar and cautious market sentiment due to upcoming policy changes, gold prices have shown resilience. The combination of sluggish US Treasury yields and heightened demand for safe-haven assets has contributed to this positive momentum.

China's role as the world's largest consumer of gold cannot be overlooked. Recent economic indicators suggest a slowdown in Chinese factory activity, but expectations of proactive government policies aimed at stimulating growth could bolster demand for gold as a protective asset.

Technical analysis in gold trading

As we enter 2025, gold prices have shown strong momentum, beginning the year on a positive note after a remarkable 27% gain in 2024. This section applies technical analysis to the current trends in gold (XAU/USD), identifying key levels and indicators that traders should monitor.

Current Price Action

Gold is currently trading around $2,636 per ounce, having recently tested resistance levels at $2,640. The price has rebounded from a critical support level near $2,600, which has held firm for six consecutive weeks. This resilience suggests that buyers are actively defending this level, indicating potential for further upward movement if the bullish sentiment continues.

Key Support and Resistance Levels

Support Levels:

• $2,600: A significant psychological level that has proven to be strong support.
• $2,592 - $2,596: Long-term ascending trendline support that traders should watch closely.
• $2,575: Additional support to consider if the price breaks below the key levels.

Resistance Levels:

• $2,640: The immediate resistance level that gold needs to break through for bullish momentum.
• $2,666: A critical level that could pave the way toward the psychological barrier of $2,700.
• $2,736: Further resistance that could challenge upward movement if reached.

Moving Averages:

• Gold is currently testing the 50-day Exponential Moving Average (EMA) at approximately $2,635. A sustained break above this level could signal a continuation of the bullish trend.
• The 100-day SMA is another critical indicator to watch; if prices maintain above this average, it reinforces a bullish outlook.

Relative Strength Index (RSI):

• The RSI is hovering around the neutral level of 50, indicating that momentum is building without being overbought. A move above 60 could confirm bullish strength.

MACD (Moving Average Convergence Divergence):

• Recent signals show a bullish crossover on the MACD histogram, suggesting increasing upward momentum. Traders should look for confirmation of this trend with price action.

Bollinger Bands:

• Gold prices are approaching the upper Bollinger Band, which could indicate overbought conditions if breached. Monitoring for potential pullbacks or consolidations near this band will be crucial.

Market Sentiment and Economic Factors

The current market sentiment remains optimistic due to several factors:

• Ongoing uncertainties in global markets continue to drive demand for gold as a safe-haven asset.
• Sustained purchases by central banks are expected to support higher gold prices.
• Upcoming US economic data, including Non-Farm Payrolls (NFP), will likely influence market dynamics and trader sentiment.

The technical analysis of gold indicates a robust start to 2025 with potential for further gains if key resistance levels are breached. Traders should remain vigilant around the $2,600 support and monitor movements through resistance levels at $2,640 and beyond. Utilizing indicators like moving averages, RSI, and MACD can provide valuable insights into potential price movements in the coming weeks. As always, staying informed about economic developments will be essential for navigating this dynamic market effectively.

Investment Strategies

While entering the market at high prices can be daunting, experts suggest several strategies for investing in gold:

• Gold should be viewed as a long-term investment rather than a short-term speculative asset. Historical trends indicate that gold can serve as a reliable store of value over extended periods, particularly during economic downturns.
• Rather than making a large purchase all at once, consider buying gold in smaller increments over time. This approach can help mitigate the impact of price volatility and allows investors to capitalize on potential dips in the market.
• Incorporating gold into your investment portfolio can provide diversification benefits. As a non-correlated asset, gold often performs well when traditional equities face challenges, making it an essential component of a balanced investment strategy.

Conclusion

With analysts projecting continued growth for gold in 2025 amidst favorable economic conditions and sustained demand from central banks and retail investors alike, now may be an opportune time to consider adding this precious metal to your portfolio. While current prices are high, the potential for significant appreciation driven by macroeconomic factors makes gold an attractive investment choice for those looking to hedge against uncertainty and preserve wealth in the coming year.

Traders may consider long-term orders supplemented by day trading strategies to ride the volatility. Be sure to check the Exness Trade app daily for live notifications, and consider testing both long and short term trading strategies on the Exness demo account.

One thing is for sure, gold has–and always will have–a front row seat to the global economy, and Exness gives you fast and reliable access to the show.