Chart of the Day - Gold (25.02.2025)

Gold continued its remarkable ascent this week, briefly touching an all-time high of $2,956.19 per ounce before pulling back slightly to trade at $2,937.65. The precious metal has gained an impressive 12.3% year-to-date and approximately 44% over the past twelve months, outperforming most traditional asset classes during this period of heightened economic uncertainty.

Recession Fears Fuel Safe-Haven Demand

Monday's trading session marked a decisive shift in market narrative from "delayed pro-growth policies" to concerns that the new US administration's actions "may be starting to cause real economic damage." This sentiment change was catalyzed by Friday's unexpectedly weak services PMI, which drove the Citi Economic Surprise Index to its most negative level since September 2024. The disappointing data, coupled with the administration's DOGE cost-cutting initiative and plans to aggressively reduce government workforce, has raised legitimate concerns about the government spendings.

Treasury Yields and Monetary Policy Expectations

US 10-year Treasury yields have fallen to their lowest levels in more than two months (4.34%), with investors increasingly betting on earlier Federal Reserve rate cuts. Swap markets now anticipate the Fed's next easing to arrive approximately two months earlier than predicted just last week, with about 53 basis points of cuts priced in for 2025. The Treasury's monthly auction of two-year notes drew record demand from indirect bidders, signaling strong confidence in future rate reductions.

Expected Rate Cuts. Source: Bloomberg L.P.

ETF Inflows Accelerate

Gold's rally has received additional momentum from renewed interest in bullion-backed exchange-traded funds. Last week saw the largest net inflows since 2022, with ANZ Banking Group analysts noting "a discernible increase in physical flows in gold-backed exchange-traded funds." This institutional buying provides further technical support for gold's upward trajectory.

The $3,000 Psychological Barrier

With eight consecutive weeks of gains—the best streak since 2020—gold is approaching the psychologically important $3,000 barrier. Technical analysts at RHB Retail Research suggest that despite Monday's mild selling pressure, bulls retain the "upper hand" based on the daily chart. 

GOLD (D1 Interval) 

Gold is trading below its ATH, near the previous high of $2,937. Bulls will aim to establish a new high, while bears will look to retest the 23.6% Fibonacci retracement level at $2,856. If successful, the 30-day SMA at $2,832 could be tested. The RSI is on the verge of forming a bearish divergence after moving out of the overbought zone. The MACD has given a sell signal and is starting to widen.