Gold under pressure: Will the decline continue?

•       What factors are affecting gold's movements at the moment?
• What is the scenario that might keep Gold price falling ?      
•       A technical look at gold prices

What factors are affecting gold's movements at the moment?

Gold prices declined at the beginning of this week's trading by more than 4%, falling from the level of 2716 to the level of approximately 2607, which is approximately one hundred US dollars.

The most prominent major factor that negatively affected gold prices was the rise in the US dollar after Trump threatened to impose 25% tariffs on imports from Canada and Mexico. This news caused the Canadian dollar to decline by about 1.41% against the US dollar, and Trump stated in his statement that these fees are necessary to limit the flow of immigrants and illegal drugs across the US border. Also, he pledged to impose additional tariffs of 10% on Chinese imports.

The other factor that is considered a major factor behind the decline in gold prices, in addition to the rise in the US dollar, is the recent statements about reaching a ceasefire agreement in the Middle East, which reduced investors’ appetite to buy gold as a safe haven.

Will gold continue to decline?

Major international banks such as Goldman Sachs and UBS expect that gold prices will achieve further gains during the next year 2025. According to the analyst’s opinion, the possible scenario that leads to stability or decline in gold prices is the cessation of the Middle East war and some positive news about the de-escalation of the war in the region. European markets, which will prompt investors to exit gold, increase risk appetite and move towards stock markets, indices and risky assets.

In addition to the geopolitical situation, the possibility of a return of inflationary pressures with Trump taking office and implementing his policies, most notably the imposition of customs duties, will prompt the Fed to be conservative and patient about the path of reducing interest rates as pre-emptive steps to control the supposed rise in inflation rates. This step will support the US dollar, which will negatively reflect on gold prices.

A technical look at gold prices

Gold is trading in a bearish direction on the four-hour frame, forming lower lows and lower highs, which confirms the downward momentum, and the corrective rise to the 2670.991 level represents an important point for a new decline to continue the downward trend and target the 2625.287 level. As for the rise, breaching the level of 2688.760, and recording a peak above it, it cancels the negative scenario mentioned above, according to the analyst’s analysis.

Figure 1: Gold chart, 4-hour frame, Trading View