The history books and price charts tell us that there is no place like gold when it comes to times of stress and conflict. Skittish investors always require safe assets to park cash when uncertainty and volatility are elevated. That means wars and geopolitical crises have provided the impetus for gold bugs for centuries.
Similarly, bullion watchers are always mindful of the dollar and policy action from the US Federal Reserve. Monetary policy easing and interest rate cuts mean gold is more attractive as a non-yielding asset. A stronger dollar also impacts the price of gold, as it is more expensive for foreign buyers so demand can fall. The idea that gold is an inflation hedge is hotly debated. and is often now seen as a myth rather than reality.
Key Market Drivers in Q1 2025
The precious metal has made a rip-roaring start to the year, up over 10% and handsomely outperforming US equity markets. Geopolitical uncertainty, primarily from President Trump’s aggressive trade policies, has so far fuelled the 2025 rally.  Other major market catalysts include ongoing central bank buying, fiscal and inflation risks, debt debasement and dedollarisation.
There has also been gradual ETF (exchange traded fund) buying, which will continue if the Fed funds rate declines. Many gold gurus have also speculated that London, the world’s largest gold hub, has been under pressure with physical deliveries and was struggling to meet demand.
Short- and Medium-Term Trend Forecast
Several investment banks have upgraded their year-end price targets in the yellow metal. UBS upgraded theirs to $3,200, while Goldman Sachs went to $3,100 from $2,890. Citibank revised its near-term (three-month) target up to $3,000 from $2,800. The bull case from Morgan Stanley sees gold hit $3,400, citing intensifying tariff uncertainty.
Trading Strategies
The long-term upward channel from the October 2023 remains firmly intact after prices challenged the lower part over the turn of the year. A neat breakout from a symmetrical triangle pattern around $2700 then followed. Bugs enjoyed eight weeks of straight gains, which was last seen in August 2020. The round number of $3000 seemingly beckons, though haven demand could lessen in the months ahead if the ceasefire possibility in Ukraine turns more permanent.
Profit-taking has impacted bulls, with initial support at $2,857 – the retracement level (23.6%) of the November low to the recent record high – holding fimr currently. The October 2024 top and next Fib level (38.2%) sits below around $2,790/5. Bulls will target the record high at $2,956 and the physchological $3k level.
Conclusion
Gold has a hugely enduring appeal with investors as a store of certainty when times are uncertain. This has kept its safe haven characteristics intact for centuries. In the near term, a stronger dollar and tighter monetary policy might eventually provide headwinds to the precious metal. But increased trade frictions might add to the haven appeal. Foreign-reserve diversification can also continue in an increasingly bipolar world.