[Christian Harris]

Gold prices stabilised around $2,630 per ounce after suffering a sharp 3.4% drop in the wake of several market-shaping developments.

Key factors driving the decline included the announcement of 25% tariffs on Canadian and Mexican goods by the Trump administration, which strengthened the US dollar and weighed heavily on the precious metal.

Gold, which is inversely correlated to the dollar, faced additional pressure as a firmer greenback made it more expensive for holders of other currencies.

Another significant factor dampening gold’s appeal was progress in Middle East cease-fire talks, which reduced demand for safe-haven assets.

With geopolitical tensions showing signs of easing, some investors shifted away from gold toward riskier assets like equities and bonds.

However, despite these near-term headwinds, analysts remain cautiously optimistic about the metal’s prospects in the medium to long term.

Central banks around the world have continued to add to their gold reserves, providing a strong foundation for future price stability. This trend is particularly evident in emerging economies, where gold is seen as a hedge against currency volatility and geopolitical risks.

Many market analysts forecast potential gains for gold heading into 2025. Persistent inflation concerns, economic uncertainty, and potential central bank easing measures are expected to bolster demand for the metal.

Additionally, gold’s role as a hedge against systemic financial risks keeps it attractive in times of economic turbulence.

While the immediate impact of the tariffs has strengthened the dollar, the longer-term economic repercussions could support gold prices. Trade restrictions often lead to economic disruptions that increase gold’s appeal as a store of value during uncertainty.

Market Dynamics & Expectations

Despite recent volatility, gold’s resilience near $2,630 suggests that it has found a temporary support level. If it continues to fall, the next support level is around $2,559.10.

Investors are watching closely for further developments in US trade policy, dollar movements, and geopolitical negotiations, all of which could influence gold’s trajectory in the coming months.

In the broader context, gold remains a favoured asset for those seeking protection against economic and political uncertainty.

While short-term fluctuations are inevitable, its fundamental drivers, such as central bank demand and its safe-haven status, suggest a positive outlook in the longer term.

As the market digests the impact of recent events, gold’s performance will likely depend on how these evolving factors play out on the global stage.

Data: eToro, MarketScreener

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