Gold’s incredible rally has momentarily paused, with investors reassessing their positions after hitting record highs. The precious metal surged nearly 14.5% from December lows, but as of today, traders are cashing in on gains, causing gold to pull back slightly.
📊 Gold’s Performance at a Glance:
- December 18, 2024: Gold at $2,599.60
- February 2025 High: Gold peaked at $2,974, gaining $375 in two months.
- Current Trading Price (February 25, 2025): $2,928.60, down 1.36% intraday.
Profit-Taking and Market Adjustments
Commerzbank analysts highlight that hedge funds and institutional traders are reducing gold long positions, signaling potential exhaustion in the rally. The latest CFTC Commitments of Traders (CoT) data shows managed money funds have cut nearly 12,000 contracts, despite overall bullish positioning still exceeding 200,000 contracts.
📉 Signs of Overbought Conditions:
- Stochastic Indicators: Gold was technically overbought by mid-January, with %K and %D crossing above 80.
- Momentum Cooling: The market saw intraday lows of $2,897, before recovering slightly.
Tariff Wars Add a Safe-Haven Boost for Gold
While profit-taking is natural after a parabolic move, geopolitical risks are keeping gold’s long-term outlook bullish.
🔴 Trump’s Tariff Shockwave:
- 10% tariff on Canadian energy imports
- 25% tariff on goods from Canada & Mexico
- Existing 10% tariff on Chinese imports
With these aggressive trade policies, global economic growth could slow down, leading to higher inflation and economic uncertainty, which historically benefits gold as a safe-haven asset.
Saxo Bank analysts confirm that safe-haven demand remains strong, as investors hedge against the rising trade war risks and inflation concerns.
Key Levels to Watch in Gold’s Next Move
🔹 Resistance Zones:
- $2,950 – $2,974 (Recent highs, psychological barrier)
- $3,000 (Major milestone level)
🔹 Support Levels:
- $2,897 (Today’s intraday low)
- $2,850 (Technical support zone)
What’s Next for Gold Prices?
Although gold is taking a breather, analysts believe that fundamental factors still support long-term upside. If inflation concerns and trade tensions persist, we could see another attempt toward the $3,000 mark. However, in the short term, some sideways movement or mild pullbacks may continue before the next bullish breakout.
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