Gold shines to start the new year after a disappointing December

December is historically a very strong seasonal time for gold but prices fell in the month for the first time in eight years. The December decline was mild from $2653 to $2623 but it was a disappointment after the month began with China’s central bank announcing that it resumed gold purchases for the first time since May.

The latest round of Chinese data will be released around January 7th and that should be another market mover. A poor start to 2025 trading for Chinese stocks is also a driver as domestic investors give up on the idea of real stimulus, especially on the consumption side.

Elsewhere, eyes are on interest rates and the dollar. US yields are down 1-3 bps across the curve today but the US dollar is strongly higher. To get a repeat of the big gold gains of 2024, we will need a turn in the US dollar.

For now though, the usual period of seasonal strength runs through January and with today’s $30 gains, gold is now fractionally higher since the start of December.

Technically, the climb above the late-December high along with a series of higher lows is constructive. There isn’t too much resistance until the $2720 level.

This article was written by Adam Button at www.forexlive.com.