The gold market has recently shown remarkable strength, with a 27.4% increase throughout 2024 and an additional 38.4% rise in the first three months of 2025. This video delves into the three major factors behind the surge in gold prices: global geopolitical tensions, active gold purchases by central banks, and market uncertainty caused by US tariff policies. Through technical analysis, we observe that gold prices are in a long-term bull market but currently in an overbought position, which may lead to a short-term pullback. In the video, we explore how these factors influence the gold market and offer investment advice to help you seize opportunities in a volatile market. Like, subscribe, and share to gain more market insights and investment strategies.
Subtitle:
Gold is on fire! Over the past week, the most actively traded gold futures contract, which is the June delivery contract, soared to as high as $3,124.40 per ounce. Remarkably, in just the first three months of 2025, gold has already risen 38.4%, building on a 27.4% increase throughout 2024. This incredible momentum shows no signs of slowing down, with gold prices having risen in 12 out of 13 weeks this year alone. Since the end of 2023, gold has gained over 50%, with prices rallying from a low of $1,127.10 per ounce on August 16, 2018.
But is it too late to buy gold? To answer this question, we need to look at the price chart and understand the factors driving this surge. Here are three key reasons behind the rising gold prices:
Geopolitical Tensions:
The war in Ukraine, now in its fourth year, remains unresolved despite ceasefire talks. Negotiations in Rio and Saudi Arabia have failed, leaving the situation stagnant. Additionally, tensions in Europe are rising, with countries like Poland, the UK, and France increasing their military preparedness.
In the Middle East, the conflict between Israel and Hamas continues, complicated by attacks from the Houthi rebels in Yemen targeting U.S. and Israeli assets. The U.S. has deployed B2 stealth bombers and a carrier group to the region, escalating fears of further conflict.
Central Bank Purchases:
Central banks, particularly aggressive buyers in 2024, have been stocking up on gold. This trend is largely due to the Bank for International Settlements reclassifying gold from a Tier 3 to a Tier 1 reserve asset in 2021, incentivizing banks to hold physical gold as a reserve.
U.S. Tariff Policies:
Since President Trump took office, tariffs have been a disruptive policy tool. Recently, a 25% tariff on all auto imports into the U.S. has sparked retaliatory measures from countries like Mexico, Canada, the EU, and China. This uncertainty has shaken Wall Street, with markets interpreting it as a negative development. Additionally, April 2nd marks the implementation of further tariff policies, which could lead to heightened volatility in the coming months.
Technical Analysis:
From a technical perspective, gold is in a long-term bull market. The weekly chart shows prices rising steadily since November 2015, when gold was hovering around $1,000 per ounce. The current target price based on technical analysis is $3,158.80 per ounce, very close to last week’s high of $3,124.40.
However, the daily chart reveals that the Relative Strength Index (RSI) is in an overbought position, indicating that the market has risen too fast and may be due for a short-term pullback. Historical examples show that similar overbought conditions in the past year led to corrective pullbacks lasting several weeks.
Outlook:
While the long-term trend for gold remains bullish, the market’s extreme optimism warrants caution. Entering April, there is a risk of profit-taking, which could trigger a corrective pullback. As a trader, I would be cautious about chasing new highs and instead look for opportunities to reposition at more favorable levels during a potential pullback.
This is my analysis, and I wish you a great week ahead!
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