Gold has been rising so persistently through most of 2024 that, by late October, it ran the risk of a major collapse due to the buying activity alone.
The downward catalyst, however, came only in early November, when Donald Trump won the presidential election. The re-election triggered a significant upsurge for assets like stocks and cryptocurrencies and sent the dollar soaring, but it also initiated a collapse for multiple commodities, including gold and silver.
By Friday, November 15, the yellow metal had fallen about 8.3% from its recent highs near $2,800 and was, at press time, trading at $2,565.
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The trend effectively reversed the late October situation, sending gold into oversold territory. In fact, the last time the world’s largest commodity was in such a situation was in October 2023.
Gold historical charts offer insight into next moves
Should the precious metal’s performance mimic the previous trend, gold might rally as much as 20% by February. Such a surge would ensure a surge to about $3,000 by February 2025, simultaneously fulfilling the predictions made by various experts since late 2023.
Another section of gold’s historical performance hinting at an upcoming rally – likely to start with the onset of 2025 – is the commodity’s performance in the wake of Donald Trump’s original election win in 2016.
Eight years ago, the yellow metal deepened its nosedive after the results were announced but reversed into a strong rally by the start of 2017. One fact possibly undermining such a reading is that, in 2016, gold was on a downtrend since August, while in 2024, the decline started only in November, showcasing history is, at best, rhyming and not repeating.
Why gold might be set for a rally despite recent downturn
A more concrete pointer for the commodity’s next move was provided by a combination of recent price action and analysis offered by Mike McGlone, Bloomberg’s senior commodity strategist.
Specifically, McGlone estimated that a reclamation of $2,600 is likely to lead to another attempted rally toward $3,000. It is worth pointing out that the senior strategist was among the first experts to predict the price point would be reached in late 2024 or early 2025.
On the other hand, he also warned that a continued plunge below $2,400 could lead to a retest of the pivotal $2,000 support zone. Still, gold’s 24-hour performance was marked by a mild upswing that enabled the precious metal to regain about $20 of its value and sent it toward $2,600.
Looking further ahead, gold will likely reinitiate its rally by early 2025 at the latest. The most recent downturn has been widely linked to stock market bullishness attributed to the incoming Republican administration and the perceived drop in geopolitical tensions amidst Donald Trump’s victory.
Such a decrease in hostile posturing is relatively unlikely despite Trump positioning himself as a strong but peaceful leader as his first presidency witnessed a trade war with China, strong support for Israeli expansionism, and almost a war with Iran.
Finally, as the recent U.S. CPI print showed a rise in inflation, investors will likely again seek the shelter provided by the world’s most famous safe-haven asset.
Featured image via Shutterstock
