Gold hits a new all-time high
Gold hit a new record high today after breaking the August's all-time high finally. A small dip now should not come as major surprise. But essentially the bullish trend will remain in place until the charts tell us otherwise.
The metal has been driven higher by falling bond yields lately, and weakness in US dollar. This is all thanks to expectations that the Fed is going to accelerate its rate cuts later in the year and into early 2025 amid weakness in US labour market data. The yellow metal is also finding support from multiple other sources: interest rate cuts and expectations of further rate cuts from central banks around the world, like the ECB, continued physical buying by central banks, haven demand amid heightened geopolitical risks, and momentum buying by traders trying to take advantage of rising prices. If inflation returns to target sooner, then the current state of the world economy requires much loose policy. Thus, any acceleration in the rate cuts could further propel gold in the months ahead.
The prospect of gold reaching $3,000 is not unrealistic, although the potential road to that target could be a bumpy one as is often the case in a rising trend. For me, a more realistic near-term target is now around $2,600 – the next round handle now that $2,500 has been taken out. The latter is now key support.
By Fawad Razaqzada, market analyst at FOREX.com
The metal has been driven higher by falling bond yields lately, and weakness in US dollar. This is all thanks to expectations that the Fed is going to accelerate its rate cuts later in the year and into early 2025 amid weakness in US labour market data. The yellow metal is also finding support from multiple other sources: interest rate cuts and expectations of further rate cuts from central banks around the world, like the ECB, continued physical buying by central banks, haven demand amid heightened geopolitical risks, and momentum buying by traders trying to take advantage of rising prices. If inflation returns to target sooner, then the current state of the world economy requires much loose policy. Thus, any acceleration in the rate cuts could further propel gold in the months ahead.
The prospect of gold reaching $3,000 is not unrealistic, although the potential road to that target could be a bumpy one as is often the case in a rising trend. For me, a more realistic near-term target is now around $2,600 – the next round handle now that $2,500 has been taken out. The latter is now key support.
By Fawad Razaqzada, market analyst at FOREX.com
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