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As the trading gets underway for the new year, several key themes are likely to drive price action. Some of these themes have already made themselves evident, while others have yet to garner significant attention.

The gold market may look to stabilize in the near-term and to give the bulls more reasons to buy. Recent downside deflated much of the market’s hot air, although much of that warm air can be quickly replaced under the right circumstances.

The nearly-$70 per ounce decline seen in gold to end last week took the market below its key 200-day moving average. Although there could be several reasons for the severe decline, some analysts have suggested that Bitcoin could have been a primary culprit for gold’s sell-off. On Friday, Bitcoin breached the $40,000 level on the upside for the first time ever, and many would-be gold buyers could have found themselves wanting to exit gold and get involved in Bitcoin or other crypto-currencies.

Of course, things can and do change fast, often times too fast. Monday’s decline of 20 percent in Bitcoin may have eroded much of the market’s recent allure, and some or even much of that capital could find its way back into the gold or precious metals markets. A fresh infusion of investor interest and capital could steer the yellow metal higher again, while smoothing market volatility.

While interest rates, the economy and Bitcoin can all have a significant impact on the gold market, investors are also likely to keep their eyes open on President Trump. As time winds down on the Trump Administration, concerns appear to be growing that Trump has become unhinged, detached from reality and could pose a serious danger to national security. Democrats plan on voting on Trump’s second impeachment this week
and appear to be in a hurry to get him out of office as quickly as possible.

Last week’s violence and destruction at the nation’s capital provided a clear indication of what could potentially occur as the country gets ready for a transfer of power. Recent reports on Monday suggested that armed protests could be set to take place in the U.S. on the 17th. Any protest, in any location, runs the risk of violence. If things do get out of control again, the consequences could be severe. The uncertainty surrounding the upcoming transfer of power could keep gold and other metals well-supported as investors seek out their perceived safety.

The incoming Presidential administration may also prove to be bullish for gold and metals. As Biden takes power, the U.S. could possibly look to increase government spending and stimulus measures in order to fight the ongoing viral pandemic. Further spending could not only lead to a sharply weaker currency, but could also fan the flames of inflation down the road. With the U.S. Federal Reserve ready to hold rates low for some time yet, the risk of accelerating inflationary pressures may rise substantially in the months ahead. A quick and significant rise in prices could lead to even more buying in gold and other hard assets, possibly providing them the fuel needed to break out to fresh highs on the upside.