Company Interview / What's next as gold goes for glory

Key points:

Gold price momentum driven by geopolitical tension, not dollar weaknessKey technical resistance levels and long-term gold target of $5,000 highlightedUSD/JPY volatility expected, with yen confidence remaining fragile and intervention likely above 158Rio Tinto (ASX:RIO) and Glencore merger seen as offering long-term structural benefits despite near-term price pressure

Gold’s rally above $4,600 per ounce has captured significant market attention, with Hebe Chen from Vantage Market pointing to escalating geopolitical tensions as a primary catalyst rather than US dollar weakness. Chen highlights that if this trend continues, January could become the strongest month for gold in a decade. Technical patterns are flagged as important, with a key resistance level at $4,361 and the next target identified at $4,662. Chen suggests that reaching $5,000 per ounce is likely a matter of time, provided current underlying drivers persist.

Turning to currency markets, Chen notes the US dollar’s recent weakness and predicts it will probably be short-lived amidst ongoing uncertainty around US economic data and Federal Reserve policy direction. The USD/JPY pair has demonstrated a V-shaped recovery since April, returning to levels last seen a year ago. Confidence in the yen remains fragile, with Japanese monetary policy leaning towards ongoing support for economic growth. Key technical levels for the pair are cited at 157.8 and 158, the latter potentially ushering in greater volatility and potential intervention.

On equities, Chen comments on the pullback in Rio Tinto (ASX:RIO) following speculation about a mega merger with Glencore. While near-term volatility is expected, Chen views the long-term structural benefits of such a deal as underappreciated by the market and likely to materialise over time.