Skip to content

Is buyer confidence in Gold fading as bears loom on the horizon?

Is buyer confidence in Gold fading as bears loom on the horizon?
Aneena Alex

Following a robust rally in 2024, gold’s momentum appears to be waning as the U.S. dollar strengthens and economic policies shift, introducing new bearish pressures. 

Initially, gold surged toward the $3,000 resistance level, buoyed by investor demand amid global uncertainties. 

However, renewed interest in the dollar, driven by President Trump’s proposed tax cuts and potential tariffs, has reversed much of this upward momentum, pushing gold prices down to test support near $2,600. 

Gold one-week price chart. Source: TradingView

Softer buyer interest fuels a correction phase

In a recent TradingView post, analyst RLinda noted that buyer momentum has softened, with investors cautious about pushing prices higher in the face of a strengthening dollar and a changing U.S. policy landscape. 

This shift has initiated a correction phase, with gold preparing to retest lower support levels as bearish factors take hold. 

Gold price projection. Source: RLinda/TradingView

Analysts suggest this trend may persist over the coming weeks, as the market re-evaluates gold’s value amid dollar strength and evolving economic policies.

At the time of RLinda’s analysis, gold was trading around $2,669, with resistance levels near $2,680 and $2,700 and key support at $2,665, $2,652, and $2,637.

Now, with gold currently priced at $2,605, significantly below these support levels, the bearish momentum has strengthened, indicating a deeper correction may be underway as market sentiment shifts more decisively downward.

Reduced rate cut expectations add pressure on Gold prices

Supporting this outlook, Ole Hansen, head of commodity strategy at Saxo Bank, observed on November 11 that gold’s ongoing correction, amid continued dollar strength and rising yields, is bringing the $2,600 level into sharp focus. 

Gold price analysis chart. Source: Ole Hansen

Hansen also points out that market expectations for Federal Reserve rate cuts have shifted, now anticipating fewer than three 25-basis-point reductions by next December, down from eight projected in late September. 

This reduced expectation places additional pressure on gold prices, as rate cuts typically increase interest in precious metals.

“Gold’s ongoing correction amid continued dollar and yield strength is bringing USD 2,600 into focus. In addition, the market is now pricing in fewer than three 25-bps Fed cuts by next December, down from around eight in late September.” – Ole Hansen

Factors behind Gold’s downturn

While global uncertainties would usually bolster safe-haven demand for gold, Trump’s proposed tariffs, including a 10% tariff on all U.S. imports and 60% on Chinese goods, have raised concerns about trade disruptions and inflationary effects. 

Additionally, recent profit-taking by investors, evident in notable outflows from gold-backed ETFs, underscores this shift in sentiment.

For instance, the world’s largest gold-backed ETF, SPDR Gold Shares (GLD), reported its largest weekly outflow in over two years, with $1 billion in funds withdrawn, according to Bloomberg. 

Following the definitive election results, some investors have exited positions to lock in profits as gold’s allure dims in favor of a stronger dollar and rising equities.

With upcoming U.S. economic data likely to influence the Federal Reserve’s rate decisions, further dollar strength could deepen gold’s decline. The focus now turns to whether the metal can sustain support at $2,600 or if mounting bearish factors will drive prices lower. 

As buyer confidence ebbs, the gold market appears to be tilting toward the bears, with macroeconomic indicators casting doubt on its short-term prospects.

For traders, monitoring support around $2,600 and the upcoming CPI release will be crucial for gauging gold’s next move.

Featured image via Shutterstock

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Services

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.