Gold Soars Above $2,800 As Year Of The Snake Begins, TSX-V Poised For Breakout
Gold traded to new all-time high levels as Chinese New Year began
Gold futures climbed above $2,800 overnight as European trading got underway and the ECB cut the deposit rate 25 basis points. The ECB’s rate cut comes after Euro Area GDP growth stagnated in Q4 of 2024, led by economic contraction in France and Germany:
As growth concerns persist and inflation is expected to return to target levels, markets are pricing in an additional three rate cuts from the ECB later this year.
Meanwhile, the Federal Reserve stood pat yesterday and Fed Chair Powell downplayed the possibility of a March rate cut from the Fed. At this point, it seems like two rate cuts from the Fed in 2025 is the baseline scenario. For 3-4 rate cuts to manifest we would likely need to see significant weakening in the US labor market.
Overall, we are witnessing a monetary policy easing cycle continuing to play out in Canada, the Eurozone, LatAm (Chile, Mexico, etc.), and the US. Perhaps most importantly, China is expected to continue its stimulus efforts in 2025. These efforts could include the largest ever fiscal stimulus from China’s central planners.
Chinese policymakers have reaffirmed their commitment to implementing both monetary and fiscal measures to bolster domestic demand amid major economic headwinds such as a property bear market, the aftermath of prolonged investment-driven growth, and ongoing trade tensions with the United States.
Gold continues to benefit from all of the above. Meanwhile, China appears to be accelerating its gold purchases in recent weeks:
Gold (Daily)
I don’t want to jinx this gold move by discussing price targets, however, I believe there is plenty of more room to the upside left. Those who watched my recent video on Trump/Xi and China’s gold buying will have some ideas of the levels I believe are possible for gold in 2025.
Finally, the redheaded stepchild that is the TSX-Venture Composite is poised for an historic breakout over the coming days:
TSX-Venture Composite (Daily)
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