Market Analysis by Miro Svoboda, Investment Advisor, Harbourfront Wealth – Sonora Wealth Group
January 31, 2025 –
“Gold demonstrated significant strength today, reaching new highs. The upward momentum was primarily driven by market participants’ reassessment of the Federal Reserve’s policy stance following its widely anticipated decision to maintain current rates. The Fed’s latest communication emphasized inflation concerns and acknowledged robust economic growth, as well as strong labor market conditions.
The precious metal’s appeal was further enhanced by recent economic indicators, particularly the US GDP data showing softer-than-expected growth during the final quarter of 2024. This economic deceleration contributed to weakening the US Dollar to a certain extent, consequently providing additional support for gold prices.
The broader monetary policy landscape has also proved favorable for gold, with the European Central Bank implementing its fifth consecutive rate cut since initiating its monetary easing cycle last June. This dovish trend has extended beyond the ECB, with other major central banks, including the Bank of Canada ending its quantitative tightening program and the Swedish Riksbank’s recent rate reduction, creating a supportive environment for non-yielding assets like gold.
Traders are also carefully monitoring the potential economic implications of widespread tariffs under the Trump administration, which could boost demand for safe-haven assets. In addition, market participants moved to borrow gold from central banks with London-based storage facilities. This surge in demand has been triggered by increased gold deliveries to the United States, prompted by speculation about potential import tariffs, resulting in a significant shortage of physical bullion in the London market.”
Miro Svoboda, Investment Advisor, Harbourfront Wealth – Sonora Wealth Group