Nov 28, 2023

The price of gold is still in a range this year despite geopolitical concerns and awaits a breakout. 


Gold – Weekly Chart

By September, gold had slumped to $1,811 but surged higher on Middle East tensions. The price needs to break above the $2,067 level to advance further. Weakness could hold up at the $1,900 level. 

Gold prices were higher last week on US dollar weakness. However, a ceasefire between Israel and Hamas to exchange hostages reduced some of the fear from Middle East tensions. 

Markets were thin into the weekend, as it is Thanksgiving weekend in the US. Investors reduced expectations of rate cuts in 2024 after data on Wednesday showed that the number of Americans filing jobless claims fell more than expected last week. Despite the Federal Reserve’s aggressive rate hike campaign, the jobs market is still strong. 

Goldman Sachs was one firm seeing strength in gold prices. “The potential upside in gold prices will be closely tied to US real rates and dollar moves, but we also expect persistent strong consumer demand from China and India, alongside central bank buying to offset downward pressures from upside growth surprises and rate cut repricing,” they said. 

On Sunday, Bank of America also said that gold should appreciate from the second quarter of 2024 as “real rates are pushed lower by the Fed cutting.” 

Liam Hunt at Gold IRA stressed the global conflict threat, saying: 

“Fears that an uncontained, regional war could disrupt global markets and supply chains triggered capital flight into gold and away from speculative assets such as high-risk stocks

Gold may see some consolidation at year-end, but a test of $2,067 is not unreasonable. Into 2024, the market has priced in a Federal Reserve that will cut interest rates, and that remains to be seen. 

Investors should look to Ukraine and Israel for a flashpoint. However, the continued deterioration of the US debt and financing picture cannot be ruled out either.

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