COMEX gold futures prices reached a $2,801.80 high in late October 2024. After a 9.3% correction to $2,541.50 in November, nearby futures have primarily traded in a $2,600 to $2,760 range. At the $2760 level in late January, COMEX gold futures for February delivery are at the top of the recent trading range
In my Q4 Barchart summary report on the precious metals, I highlighted that gold led the sector in Q4 with the only gain and was the leader in 2024, with a nearly 27.5% annual price increase.
The gold rally remains firmly intact in early 2025
Gold prices have declined since the late October 2024 record peak, but the market remains bullish long-term.
The quarterly continuous contract COMEX gold futures chart highlights the pattern of higher lows and higher highs since the 1999 bottom created when the United Kingdom auctioned half the country’s gold reserves. Gold reached $2,801.80 per ounce last year, but the correction from the high did not negate the leading precious metal’s long-term bullish pattern.
Consolidation is healthy
The short-term daily chart of February COMEX gold futures shows that the price action has been consolidating over the past months.
The daily February gold futures chart shows that after falling from $2,826.30 on October 30 to $2,565.00 on November 14, gold has primarily traded between $2,600 and $2,760 per ounce. At the $2,760 level in January 2025, gold’s price is at the upper end of the recent consolidating range.
Consolidation can be healthy for a bull market as it cleanses weak longs and shorts. Meanwhile, the price has been trending marginally higher since the end of 2024, making higher lows and higher highs. Simultaneously, open interest in the COMEX gold futures market, the total number of open long and short positions, has risen from 459,422 contracts on December 31, 2024, to the 558,000 level on January 17. Rising prices and increasing open interest are typically bullish signs in a futures market.
Central banks will continue to increase reserves
Central banks, governments, and monetary authorities continued to be net buyers of gold in 2024. In 2024, the official sector added 1,037 tons of gold, the second-highest annual purchase in history, after buying a record 1,082 tons in 2022. Central banks view gold as a stable and secure strategic asset. The official sector purchases continue to validate gold’s role in the international financial system, where they designate gold as a currency reserve.
Moreover, the data could be vastly understated. China is the world’s leading gold producer, with Russia the second-leading producer. China and Russia are centrally planned countries and consider gold and other commodity production state secrets and national security matters. The bottom line is that China and Russia have likely vacuumed domestic gold output, increasing their reserves above the reporting levels. Gold remains a hard currency, and governments continue to grow their holdings.
The most bullish factors for gold in 2025
The most bullish factors for gold in 2025 include:
- The long-term bullish trend is now twenty-six years old and shows no sign of faltering.
- Gold has rallied to new highs and was nearly 27.5% higher in 2024 despite a strengthening U.S. dollar index, which was over 7% higher in falling U.S. government long bonds, which fell 8.65% in 2024. A rising U.S. dollar index and increasing interest rates tend to be fundamentally bearish for gold. Gold’s performance in 2024 signals significant underlying strength.
- The geopolitical landscape remains highly volatile in early 2025 with the bifurcation of the world’s nuclear powers and two ongoing military conflicts. Gold prices tend to appreciate during times of international turmoil.
- The rising U.S. debt, at over $36.35 trillion, erodes the full faith and credit of the world’s leading economy. Gold is the world’s oldest means of exchange, and its limited supply continues to make it attractive compared to currencies, where values are a function of the faith and credit in the governments that issue the legal tender.
- Many financial experts recommend owning gold as an integral part of individual portfolios. Over the past decades, gold ETF products have expanded the precious metal’s addressable market
- Gold remains a critical ingredient in jewelry, coveted worldwide. Fabricated demand accounts for a significant percentage of annual gold production.
The case for higher gold prices remains compelling in early 2024 at the $2,760 per ounce level. I expect the gold market to continue rising to new record highs over the coming year.
Meanwhile, perhaps the most compelling factor is that the 1980 high in gold was $875 per ounce. In 2025 dollar, $875 is worth $3,350, which could be an initial upside target for the precious yellow metal over the coming months and years.
Buying on dips has been optimal- Stick with what has worked for decades
Even the most aggressive bullish trend rarely moves in straight lines; gold is no exception.
The monthly continuous COMEX gold futures chart shows substantial correction over the past twenty-six years. Over the period, gold has maintained the pattern of higher lows and has continually risen to higher highs, surpassing the 1980 peak in 2008 and making new all-time highs in 2009, 2010, 2011, 2020, 2023, and 2024. Buying gold during price corrections during the bull market on a scale-down basis has been optimal for decades.
Gold has increasingly shined as an investment asset during this century, and I expect that trend to continue over the coming months and years. Gold may be stuck in neutral in early 2025, but the bull market will remain intact if the price holds above the critical technical support level at the November 2022 $1,618.30 low.
