Since the beginning of 2025, bullish movements have driven gold to increase by more than 5% of its total value, once again approaching its historical high near the $2,780 per troy ounce level. Buying pressure has gained strength amid a weakening dollar and growing market uncertainty.
The Role of the U.S. Dollar
Since Trump’s inauguration on January 20, the dollar has faced a significant wave of selling pressure, attributed to uncertainty surrounding the new tariffs the president plans to impose on several countries. The market remains uncertain about whether these measures will create competitive economic advantages for the United States. For now, investors have opted to seek refuge in currencies like the euro and yen. This shift has substantially reduced demand for the dollar in the short term.
This impact is reflected in the DXY index (which measures the strength of the U.S. dollar). While it hovered above 109 points on January 20, it fell to the 107-point zone and is currently fluctuating around 108 points without a clear trend.
Source: MarketWatch
A weaker dollar in recent sessions has reignited interest in gold. As a globally traded commodity priced in dollars, a weaker greenback lowers the acquisition cost of gold for buyers using other currencies. This dynamic has boosted demand for gold and contributed to maintaining bullish pressure on XAU/USD.
Market Uncertainty
U.S. indices, such as the S&P 500, fell more than 2.5% yesterday due to a massive selloff primarily led by Nvidia. This is tied to the new DeepSeek artificial intelligence project in China, which offers a more efficient, lower-cost, open-source product compared to American companies. This development has cast doubts on the AI industry and introduced volatility to the world’s most important equity market.
While indices have declined, gold has resisted significant devaluation in the short term. This resilience stems from its status as a safe-haven asset, which becomes more attractive during periods of uncertainty and volatility. If fears about potential sanctions and a weaker U.S. stock market persist, investors are likely to seek stable assets to protect their capital, and gold could benefit, maintaining its bullish bias in the coming sessions.
Gold Technical Forecast
Source: StoneX, Tradingview
- Trend Resumes: Since mid-February 2024, gold has maintained a consistent upward trend, which had been questioned due to the range-bound behavior observed in the final months of 2024. Now, the price has regained remarkable bullish strength, retaking the historical high zone and positioning itself above the upward trendline. Additionally, the 50- and 100-period moving averages have resumed a positive slope, confirming short-term buying strength. However, the price must overcome the last resistance zone to sustain the bullish bias.
- ADX: The ADX line remains above the neutral 20 level, indicating that recent buying movements have sufficient trend strength. As long as the ADX line stays in this range, confidence in buying pressure and the bullish momentum for gold is likely to persist.
Key Levels:
- $2,780: Resistance at the previous historical highs. Oscillations above this level could confirm an extension of buying strength, paving the way for a renewed bullish trend in the coming sessions.
- $2,710: The nearest support, coinciding with the highs reached in recent months. Declines below this level could generate uncertainty and lead to more pronounced short-term bearish corrections.
- $2,650: The ultimate support level, located near the 50- and 100-period moving averages. Oscillations around this level could jeopardize the current bullish trend and open the door to a possible bearish bias
Written by Julian Pineda, CFA – Market Analyst