At the beginning of the week gold prices updated the historical maximum, exceeding $2100 per ounce. Traders grow increasingly confident the Federal Reserve will cut interest rates in the new year. As a rule, such conditions are favorable for the yellow metal due to the reduction of alternative costs of its storage.
The precious metal rose 3.1% to $2,144 in early Asian trade. At the moment, the price has rolled back to the level of the previous historical maximum — $2079.
The gold rally was strengthened on December 1. Back then, comments by Fed Chairman Jerome Powell confirmed that monetary policy was “well into restrictive territory”.
According to Chris Weston, head of research at Pepperstone Group, there have been significant changes in the precious metal market. However, US labour data later this week could pose an element of downside risk to the precious metal prices. Bets on lower real rates into next year look very aggressive, he said.
The yellow metal is trading at a hefty premium to models of its price based on its historic relationship with the US dollar and Treasuries. That dynamic has persisted for most of the past year, driven by record buying by central banks, which helped bullion weather persistent outflows by gold-backed exchange traded funds (ETFs).
According to Sonia Kumari of ANZ Banking Group Ltd, 2024 will be a favorable year for gold. The precious metal will be supported by further monetary policy of the Fed, as well as geopolitical and economic factors.
The gold price is in an upward trend on the daily chart.
According to the wave analysis, the price of the third ascending wave has successfully fulfilled its function on the H4 timeframe.
The Stochastic Oscillator indicator (standard values) shows divergence, which signals the possible completion of the third ascending wave’s formation and the transition to the fourth. It seems rather risky to open sales in a rising trend.
Thus, a correction to the level of $2040 is needed for gold buying.
Signal:
The short-term outlook for GOLD is to buy near the level of 2040.
The target is at the level of 2140.00.
Part of the profit should be fixed near the level of 2100.00.
A Stop-loss should be placed near the level of 1965.00.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
