Credited: Kitco
Spot gold started the week trading at $2,620.93 on Sunday evening before setting a near-term triple top at $2,630 per ounce in the early morning. North American traders started the week with gold trading back near $2,620, and they promptly drove it to $2,634 per ounce by late morning. It was then Asia's turn to drive the price action, and they pushed spot gold to a high of $2,638 per ounce overnight.
Wednesday morning brought the single strongest move of the week, with spot gold rising from $2,625 at 7:30 a.m. Eastern all the way to a new all-time high of $2,663 per ounce half an hour before the North American market close. By 9:00 p.m., spot gold was trading at $2,670 per ounce, after which the yellow metal settled into a range between $2,652 and $2,666.
Thursday morning marked the week’s high point for gold after it traded above $2,685 per ounce in the spot market just before 8:00 a.m. Eastern. From there, spot gold oscillated between a low of $2,660 and a high of $2,677 until the Friday morning equity open, coming one hour after core PCE for August came in cooler than expectations, which saw traders drive gold prices sharply below $2,650 per ounce.
After dipping as low as $2,645 shortly after 2:00 p.m. Eastern, spot gold recovered to trade around $2,650 per ounce for the duration of the trading session. The latest Kitco News Weekly Gold Survey saw industry experts equally balanced between further gains and price declines in the near term, while retail investors remained positive but more restrained on gold’s potential gains next week.
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “Applying Newton’s First Law of Motion to markets: A trending market will stay in that trend until acted upon by an outside force. That outside force is usually investor activity, and given the potential for global chaos is only going to increase over the next month, investors aren’t likely to change their mind on gold as a safe-haven market. “I see it lower as I believe the rally is running on fumes from FOMO and momentum-chasing traders using derivatives,” said Ole Hansen, head of commodity strategy at Saxo Bank. “In the short term, physical demand is likely to dry up until investors adapt to these new and higher price levels.” “Another reason why the rally may stall can potentially be found in China, where the well-off middle class has been buying gold at the expense of an under-pressure equity market and declining property prices,” Hansen added. “However, following the stimulus announcements, the Hang Seng Index has jumped 13%, while the Shanghai CSI 300 Index has risen close to 17% this week. Whether these initiatives have a positive impact on consumer sentiment and the property market, leading to a reduced focus on gold as a safe-haven investment, remains to be seen.” “Unchanged,” said Adrian Day, president of Adrian Day Asset Management. “A pause in the strong move up is overdue and could come this coming after now that the Federal Reserve’s first rate cut is in the rear mirror.” “Over the next six and 12 months, I could not be more bullish as Western investors finally start to buy gold,” he added, “but markets do not go straight up forever.”
Marc Chandler, Managing Director at Bannockburn Global Forex, said the week’s big news was the ‘reflation’ efforts by China. “Even if Chinese retail demand for gold has slackened, demand from India appears strong,” he said. “Technically, the momentum indicators are getting stretched. Although the GDP/GDI upward revisions and the decline in weekly jobless claims dampens the likelihood of another 50 bp Fed cut in November, other central banks, including Canada and Sweden, may accelerate their cuts.” “Next week’s US jobs report is important,” Chandler added. “A weak number could send gold higher.”
Kevin Grady, president of Phoenix Futures and Options, said he doesn’t see any cause for concern in Friday’s gold price pullback. “You had a nice run in gold,” he said. “I think you can see both markets [equities and precious metals] rallying together. It's just a good environment for it, I would say. I think corrections are normal, the correction is healthy, it can't just keep running. I think the rate picture is going to continue to be profitable for both metals and stocks.”
Grady said that despite the direction market expectations seem to be moving, he doesn’t see another half-point cut from the Fed at the next meeting. “I don't think another 50 basis points Is warranted right now,” he said. “They're saying the inflation numbers are starting to go in the correct direction, but it's what they're calculating, right? Food prices are still up 20 percent. Energy prices have come off a little bit, but energy prices are still up. Insurance, housing prices, education, all these things are still very, very inflationary.” Grady said the upcoming election also matters. “The 50 basis points, some people didn't think that was warranted, I think it probably was, but I think a quarter-point would do the market well, and I think it would be prudent. I don't think you want to go too fast. If you start seeing that you've cut too much and inflation is still expanding, the last thing you want to do is to have to reverse course and have a rate hike.” “They really have to make sure that we're going in the right direction,” he added. “I think slow and steady is the way to go.” Grady said there’s a good chance that the employment picture will worsen between now and the end of the year because the apparent strength in the job market is largely illusory. “We have a really interesting situation here in this country where a lot of jobs are switching from one hand to the other hand,” he said. “There are a lot of low-paying jobs that are out there. The other interesting thing is when you look at all the job creation, it's coming from the government, they're creating a lot of these jobs. I'm not so positive right now on the job market.” All of this is very supportive of gold, Grady said, including even the dips and the pullbacks. “I think that there's a psychological level of $3,000 for gold, obviously we've never been there,” he said. “The key, and I know it sounds counterintuitive, but these selloffs really help the rally, because what they're doing is they're shaking out a lot of weak longs that are just trying to drive those prices up. The real people that want to own it for the long term, the strong hands, are buying gold and they're holding on to it. And they're buying on the dip.” “I think the higher lows are indicative of good pricing,” he said. “I like the selloffs. I think the selloffs are helping.” As for when the market might breach the $3,000 level, Grady said the election and its aftermath make timing the market even more difficult than usual. “It's very hard to pin a time on it because we're going into the election, and I think that's the wild card,” he said. “People can throw numbers out there and say, ‘We're going to go here at this time,’ but I think the election is going to be a really pivotal time for gold and the markets. We have to see how this works through, and what the markets digest and once policy stuff is coming out.” “It's going to be hard, but second half of 2025, it sounds legit to me,” he said. “If interest rates are continuing to come off, you're going to see the price of gold rallying.”
This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street reaching an equilibrium between optimism and pessimism on the price action. Six experts, or 43%, expected to see gold prices rise during the week ahead, while another six predicted price declines for the precious metal. The remaining two analysts, or 14%, believe gold will trade sideways next week. Meanwhile, 192 votes were cast in Kitco’s online poll, with the majority of Main Street investors retaining their optimistic outlook, albeit a slimmer majority than the prior week. 120 retail traders, or 62%, looked for gold prices to rise next week, while 38, or 20%, expected the yellow metal to trade lower. The remaining 3 respondents, representing 17%, saw prices consolidating during the week ahead.
The main economic news event next week will be the Friday morning release of the nonfarm payrolls report for September. Other significant data include Tuesday’s European CPI, U.S. ISM Manufacturing PMI, and JOLTS Job Openings reports, the ADP Employment report on Wednesday, and the Thursday morning publication of weekly jobless claims followed by the ISM Services PMI. Markets will also be listening closely to what Fed Chair Jerome Powell has to say when he speaks at the annual meeting of the National Association for Business Economics (NABE) on Monday. This will be Powell’s first live event since the central bank’s monetary policy meeting last week.
James Stanley, senior market strategist at Forex.com, is bullish for next week. He said that technicals on all time frames are showing overbought conditions, but that means nothing for gold as central banks continue to ease. “Gold will just move further into overbought territory,” he said.
Mark Leibovit, publisher of the VR Metals/Resource Letter, expects gold prices to dip next week. “Pullback. Extended. Approached my $2700 near-term target,” he said.
Daniel Pavilonis, senior commodities broker at RJO Futures, was looking at Friday’s pullback in gold prices within the context of election season. “I think we're heading into profit-taking,” he said. “This has been a significant move, and we don't know how the elections will pan out. If you look at the market structure, it looks like it wants to continue up to $3,000 on gold, but I think there's just a lot of headwinds right now. Geopolitically, everything that's going on in Lebanon right now, to the stuff that's going on with elections here in the U.S.” “I think there's just so much uncertainty, which ultimately could be bullish for gold, but I can see, and this is not just in gold, but across the spectrum of markets, a little bit of hesitancy to put on new positions going into this, or be over-leveraged going into the volatility with this stuff coming up,” he added. “I think it is profit-taking. I think it's maybe a little bit of hedging and a little bit of just narrowing risk profile, and it's better to do that earlier than later.” “As we get closer to the U. S. elections, I think you're going to want to be in a good position going into that, at least a couple of weeks ahead of that.”
Pavilonis said he sees politics influencing the decision-making process between now and November 5. “We're in an election year, and a lot of the data is skewed,” he said. “We saw with the revision of the unemployment report, 800,000 jobs or something like that… this is just typical ahead of elections. It's just papered over, and then, after elections, you're going to hear, ‘Oh we said this, and we were looking at that, and we never said this…’ I think that's how this eventually plays out, because I do think we're going into a recession.” Pavilonis said this is already showing up in the U.S. housing market. “Even though interest rates are already lower, you don't see a big pickup and home purchasing,” he noted. “Car sales are down. Money market accounts are at all-time highs. People are not spending, and it could be because there's the sentiment here in the U.S. that something's just not right, economically but also politically, and there's this scare of what's going to happen.” He added that geopolitical risks, at home and abroad, will be the real drivers of gold prices heading into the new year, much more so than rates. “And there's so much more than just the Russia, Ukraine, EU, NATO, Israel, Hamas, Iran,” he said. “This thing goes all the way to de-, to the amount of debt here in the U.S. This is just one of those points where, if you're sitting on a lot of money, do you want to keep it in U. S. dollars, do you want to keep it in Euros, where do you put your money? You want to buy gold. And you can see that quite clearly when you look at Costco's gold bar sales, the one-ounce gold bars, they sold out right away.” Pavilonis also said the Fed’s recent cut may not be the start of a cheap-money rally like many investors are hoping, but could instead be a harbinger of a serious economic and market downturn, if history is any guide. “Last time the Fed cut a half-point was in 2007, and it was right around late September,” he warned. “And less than 30 days later, we saw a pretty big selloff. Obviously, things could be different, because we're going into elections, but it's just something to be cognizant of.”
Alex Kuptsikevich, Senior Market Analyst at FxPro, said markets are entering the wild part of the gold rally. “Gold has hit all-time highs on each of the last six trading days,” he noted. “Thursday's touch of $2685 followed the strongest selling momentum since 18th September, when initial profit-taking expanded following the release of strong GDP growth estimates.” Kuptsikevich said that short-term intraday profit-taking “is both fuel for further gains and a sign of uncertainty at this stage of the market.” “Technically, gold has already crossed above the 161.8% level of the two-year rally since August 2018 - a typical rally extension pattern along Fibonacci levels,” he pointed out. “When the price has moved so far into the area of historical highs, it becomes more difficult to find new upside targets.”
Kuptsikevich said that market participants are now looking for signs of overbought conditions. “On the weekly timeframe, the RSI index is approaching the overbought level of 80,” he said. “This is only the sixth time since 2008 that the index has entered this territory, with corrections of 6-20% following. The last one was 6% at the end of last year, but the others were much deeper. In 2011, this overbought area locked in a price peak for the next nine years.” “Gold's strong rally over the past three weeks is the most dangerous part of the trend for short-term sell-side traders who get involved in selling without reliable signals,” Kuptsikevich said. “On a weekly timeframe, such a signal would be a negative weekly close. At the earliest, we will get this signal next Friday. The publication of monthly data on the US labour market will reinforce its importance for the markets.”
Michael Moor, Founder of Moor Analytics, says the technical picture suggests prices are headed lower in the near term. “I cautioned on 8/16/18 the break above $1,179.7-$1,183. warned of renewed strength. We have seen $1,525.0,” he said. “The solid trade above 21475-84 projects this upward $151 minimum, $954 (+) maximum. We have attained $560.3. The trade back above 25375 (-.6 tic per/hour) warned of renewed strength—we have seen $171.2. The trade above 25454 (-.5 of a tic per/hour) projects this upward $17 minimum, $55 (+) maximum—we have attained $163.3. The trade above 26336 (+2.5 tics per/hour) warns of continued higher trade—we have seen $75.1.” “If we fail back below where this comes in today at 26638 (+2.5 tics per/hour starting at 7:00am) decently, look for decent pressure,” Moor added. “Decent trade below 26317 (+3.3 tics per/hour starting at 7:00am) will project this down $85 (+). I warned of pressure overnight before/if resuming higher trade—we are called $7.8 lower.”
And Kitco Senior Analyst Jim Wyckoff expects to see gold prices decline in the near term. “Steady-weaker as the market is short-term overbought, technically, and due for a corrective pullback,” he said.
At the time of writing, spot gold last traded at $2,650.47 per ounce for a loss of 0.81% on the day, but a gain of 1.14% on the week.
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