Global gold prices were mixed on Monday. However, prices remained close to the record highs they hit last week. Bullion is on track for its best quarter in more than eight years. This is due to the US interest rate cut decision and expectations of another major cut in November.
US Dollar Impact
Gold spot prices fell due to the stability of the US dollar index contracts. The strength of the dollar makes gold less attractive to holders of other currencies.
Gold Performance in Q3
Bullion prices have risen by more than 14% so far this quarter. This is the best performance since January 2016. On a monthly basis, gold has increased by 6% in September. Gold hit a record high of $2,685.42 on Thursday. This rise is due to the Federal Reserve’s half-percentage-point rate cut, Chinese stimulus measures, and concerns about the war in the Middle East.
Future Price Outlook
“Gold still looks poised for a potential rally to $2,700,” said Tim Waterer, senior market analyst at KCM Trade. That depends on US labor market data this week. The data set includes employment figures that could provide further clarity on the state of the labor market.
Jerome Powell Speech
Federal Reserve Chairman Jerome Powell and Governor Michelle Bowman are expected to deliver speeches later today. “If Powell’s speech keeps investors optimistic, the US dollar could suffer while gold could benefit again,” Waterer added.
US Economy and Inflationary Pressure
Data on Friday showed the US economy maintained some momentum in the third quarter. Inflationary pressures continued to ease, boosting expectations for another aggressive rate cut at the Fed’s November meeting.
Gold Performance on Friday and Current Gold Moves
Zero-yield bullion is preferred as an investment in a low interest rate environment and during geopolitical turmoil.
Gold Performance on Friday
Gold prices fell during trading on Friday, ending a seven-session winning streak. This came amid profit-taking by investors. Consumer confidence in the United States also rose for the second month in a row.
Settlement Prices
At settlement, gold futures for December delivery fell 1%, or $26.8, to $2,668.1 per ounce. However, the yellow metal achieved gains for the third week, increasing by 0.85% since the beginning of the week.
Current Gold Movements
Gold futures are currently recording a rise of 0.38%, reaching $2,678 per ounce. While spot gold contracts fell by about 0.06%, recording $2,656 per ounce. The dollar index contracts are stable at 100.10 points.
Does optimism for a new rise in gold prices continue?
A recent poll published by Kitco showed a balance among experts on the future of gold prices. Many are wondering whether the current gains will continue or if prices will see a decline in the near term.
Analysts’ Expectations
“I see gold rising,” said Darren Newsom, an analyst at Barchart.com. He added that the market will continue its current trend until an external force acts. Investor activity is often that force. With global chaos likely to increase next month, investors are unlikely to change their minds about gold as a safe haven.
Dissenting Opinion
On the other hand, Ole Hansen, head of commodity strategy at Saxo Bank, indicated that he expects gold to decline. Hansen explained that the current rally is based on investors’ fear and searching for momentum. However, actual demand may decline as investors adjust to the new prices.
Gold Moves After Interest Rate Cut
After the Federal Reserve began its easing cycle with a larger-than-expected 50 basis point rate cut, gold prices saw remarkable moves. Precious metals investors managed to set new record prices for gold over the course of six consecutive trading sessions.
Start of the Week
Spot gold started the week at $2,620.93 per ounce on Sunday evening. It then hit a near triple-digit high of $2,630 per ounce early in the morning. As U.S. traders entered, the price quickly rose to $2,634 per ounce during the afternoon.
Price Action in Asia
Asian markets led the price action, pushing gold to $2,638 per ounce overnight. These moves reflected growing confidence in precious metals.
Strongest Move of the Week
Wednesday morning saw the strongest move of the week, with spot gold rising from $2,625 at 7:30 a.m. ET. The price reached a new all-time high of $2,663 per ounce half an hour before the North American market closed. By 9:00 p.m. ET, spot gold was trading at $2,670 an ounce.
Price Peak
Thursday morning marked the highest point of the week, with gold surpassing $2,685 an ounce in the spot market just before 8:00 a.m. ET. After that, gold oscillated between a low of $2,660 and a high of $2,677 until the stock market opened on Friday morning.
Economic Data Impact
Gold fell sharply to below $2,650 an ounce after the release of the core personal spending index for August, which came in weaker than expected. After falling to $2,645 at 2:00 p.m. ET, spot gold recovered to trade around $2,650 an ounce by the end of the trading session.
China Situation Impact and Outlook
Hansen added that the situation in China could also impact momentum. Demand for gold from the middle class in China is high, as gold is seen as a safe haven amid stock market pressures and falling property prices.
Pause
On the other hand, Adrian Day, head of asset management at Adrian Day, indicated that the market may pause after the strong rally. “A pause is expected after such a big rally, especially after the Fed cut interest rates,” Day said.
Outlook
Day added that over the next six to 12 months, he is more bullish on the gold market. He expects Western investors to finally start buying gold. However, he noted that markets do not rise permanently, reflecting the volatility of the market.
Other Metals Performance
Spot silver fell 0.4% to $31.49 an ounce, after hitting a 12-year peak on Thursday. Silver is expected to gain 8% on the quarter. Platinum fell 0.1% to $999.35, while palladium rose 0.1% to $1,012.50. Both metals are on track for quarterly gains. Despite the recent decline, gold and other metals remain volatile due to multiple factors. The market continues to monitor economic developments and their potential impact on precious metals prices. Despite the volatility, gold prices continue to reflect market dynamics and their impact on economic decisions. Economic and political factors remain under the watch of investors, which influence future price movements.
