Gold prices are expected to experience a short-term dip before resuming their rally, according to market analyst Gary Wagner. He believes the current correction will conclude by the first or second month of this year, after which gold prices will rally significantly. Wagner highlighted key technical levels that are crucial for confirming the end of the correction and the beginning of the next rally.
Support levels around $2,575 and $2,600 are essential to confirm the correction is over. The potential for the U.S. dollar index to climb to 113 before hitting major resistance was also discussed. Historically, a strong dollar can sometimes coincide with strength in gold, often linked to significant shifts in monetary policy.
Wagner emphasized the continued presence of fundamental drivers, such as geopolitical uncertainties, including conflicts in the Middle East and Ukraine, and rising inflation, which continue to drive the demand for gold.
Gold rally outlook and drivers
Silver has been significantly outperforming gold this year, breaking above $30, a level not seen in a decade.
Wagner believes that silver could have completed its correction phase and has room to rise, potentially seeing more immediate gains than gold. Recent U.S. jobs data could potentially slow the pace of Federal Reserve rate cuts. The pace of these cuts will depend on future economic data and the inflation outlook.
Goldman Sachs recently revised its gold price forecast to $2,910 by the end of 2025. Wagner holds an even more bullish outlook, suggesting that gold could reach $3,000 based on current technical indicators and fundamentals. If new tariffs are implemented, they could create trade wars and substantial inflationary pressures, significantly affecting gold prices, Wagner warned.
While there may be short-term volatility, the long-term outlook for gold remains bullish, driven by a combination of technical factors, geopolitical uncertainties, and potential inflationary pressures.