The chart above shows that the gold market broke out of a strong cup and handle pattern in 2024. This breakout took place after the bullish technical formation of the past few decades. The breakout in 2024 started a significant rally. The all-important breakout level was $2,075, and above this level opened the door to the $2,800-$3,000 area.
Concerns about inflation, geopolitical instability in the Middle East, conflict between Russia and Ukraine, tensions between the United States and China, and global monetary policy contributed to the outbreak. Central banks continue to purchase gold as a reserve asset to diversify away from the US dollar. This breakthrough in the gold market resulted in consecutive quarterly positive candlesticks. These candlesticks emerge from a cup-and-handle pattern, suggesting strong bullish momentum in 2025.
Main drivers of gold price in 2025
Geopolitical tensions and market volatility
Geopolitical crises will have a significant impact on gold prices in 2025, as gold has moved out of the pivotal region in 2024. Protectionist policies and ongoing trade tensions between the US, EU and China are expected to increase market volatility. These disputes can disrupt global trade flows, affect the prices of imported goods and increase inflation. Additionally, regional conflicts such as the Israel-Hamas war and tensions in the South China Sea could escalate, driving investors to gold as a safe-haven asset. These uncertainties can amplify market volatility and sustain increased demand for gold, especially during periods of increased geopolitical stress.
