Is Gold Losing Its Shine?

Gold dominated the headlines in 2024, leading the scene due to several key factors, primarily geopolitical tensions and investors turning to it as the number one safe haven in the markets.

• What are the reasons behind its decline as 2024 approaches its end?
• Analysts expectations for its movements by the end of this year?
• What factors will directly affect gold’s movements in the coming period?

What are the reasons behind its decline as 2024 approaches its end?
Gold recently dropped from the level of 2717.62 to 2583.150, a decline of approximately 4%. This drop was driven by rising inflation rates in the United States, which reached 2.7%, strengthening the US dollar and negatively impacting gold prices. Another factor maintaining this decline was the Federal Reserve meeting held on December 17-18. The Fed announced that it would reduce interest rates only twice in 2025, while the markets had been pricing in a reduction of three times. This shift in monetary policy, favorable for the dollar, pushed gold prices down to touch 2582.637, their lowest level in the past three weeks.

What are the expectations for its movements by the end of this year?
On a daily timeframe, gold has maintained a positive pattern, forming higher highs. A change in trend from bullish to bearish depends on breaking the level of 2536.920 with a daily close below it, according to the analyst.
On the four-hour timeframe, as shown in the chart below, gold is trading in a downward trend, forming lower lows. The current rise is considered a short-term corrective move, with the level of 2637.321 being crucial for a renewed decline, targeting 2599.837 as the first goal and 2575.951 as the second, as per the analyst's view.
The negative scenario on the four-hour timeframe is invalidated if a candle closes above the level of 2651.905, according to the analyst.

What factors will directly affect gold’s movements in the coming period?
Gold's movements in the coming period will be directly influenced by the US dollar, as they have an inverse relationship. As long as the dollar remains strong and the Federal Reserve maintains a tightening policy, gold prices are expected to face further downward pressure. Conversely, a weakening dollar could positively impact gold prices.
On the demand side, gold’s movements will depend on the policies adopted by countries in the coming year. For instance, some nations might turn to gold purchases as a hedge against potential inflation risks or economic wars. Notably, China has resumed its gold purchases after a six-month pause. It’s worth mentioning that Trump’s policies on tariffs with China have spurred this trend, although his appointed team appears less aggressive compared to his rhetoric.
Lastly, geopolitical risks should not be overlooked. Any escalation or outbreak of new conflicts could positively affect gold prices, according to the analyst's view.