Precious metals have dazzled investors for decades, but the tide may be turning. Recent movements in gold and silver futures suggest the so-called "golden period" could be ending, as expectations for aggressive rate cuts fade amid shifting geopolitical and economic landscapes.
A key factor driving this uncertainty is the policy direction of President-Elect Donald Trump, who takes office on January 20, 2025. Trump has signaled a commitment to strengthening the US dollar, a stance that could complicate the Federal Reserve’s ability to cut interest rates further. While the Fed remains focused on curbing inflation, some members have already expressed concerns about the limits of monetary policy.
Trump’s potential policy shake-ups add another layer of complexity. His approach to currency balance and global trade development could significantly impact markets. For precious metals, traditionally seen as safe-haven assets, the combination of a stronger dollar and improving trade relations may spell trouble.
If Trump’s strategies succeed in stabilizing the global economic environment, gold and silver could face significant headwinds. These non-yielding assets thrive in times of uncertainty, but a shift toward global peace and economic stability might lead to price exhaustion in the months ahead.
Technical Levels to Watch
Gold Futures
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Weekly Chart:
Gold futures have begun to feel the weight of bearish momentum after climbing steadily since mid-December 2024, when prices rebounded from $2,589.
Currently, gold hovers precariously above key moving averages (9 DMA and 20 DMA). A breakdown below these levels this week could trigger a selloff, with the next support at $2,617. A sharper decline could push prices to test the 50 DMA at $2,471 this month.
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Daily Chart:
On the daily chart, gold futures are under pressure following the formation of a "Bearish Engulfing" pattern near the $2,723 resistance.
Despite a recent "Bullish Crossover" by the 9 DMA and 20 DMA, trader sentiment remains cautious ahead of key inflation data. A breakdown below the 50 DMA at $2,657 could accelerate losses, with $2,639 (100 DMA) emerging as the next critical support.
Silver Futures
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Weekly Chart:
Silver futures saw bullish momentum in the last two weeks after bouncing off strong support at the 50 DMA ($29.35).
However, a "Bearish Crossover" by the 9 DMA and 20 DMA signals growing downward pressure. Resistance at $31.88 remains unbroken, and silver is now trading within a narrowing range, suggesting a continuation of bearish sentiment in the weeks ahead.
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Daily Chart:
Silver futures face extreme weakness, clinging to support at the 200 DMA ($30).
Following yesterday’s steep selloff, a breakdown below this level could trigger further losses, dragging prices deeper into bearish territory.
Key Takeaways for Traders
Gold and silver are navigating turbulent waters, with silver showing greater vulnerability despite its industrial demand. Much depends on how Trump’s policies shape the economic and geopolitical landscape. For now, traders should closely monitor key technical levels and remain prepared for potential volatility.
Disclaimer: This analysis is based on observations and is for informational purposes only. Readers should conduct their own due diligence before making investment decisions.