Buying gold as price is expected to rise to level of 2385

Gold prices over the past week managed to update the historical maximum at 2450, which was followed by a strong correction. For 2 trading sessions an ounce of the yellow metal lost almost $100 in price, but near the level of 2330 traders have completed massive sales. On Friday, the situation in the gold market stabilized, and today prices gradually began to recover lost positions. The nearest target of the bulls could become the level of 2385.

Many participants of the gold market were waiting for a pullback, intending to buy the yellow metal profitably. Now such an opportunity has just presented itself, and Reuters already fixes some revival of demand in Asian countries. In the domestic market of India discounts to global prices reached the level of $13 per ounce, and in China there is a significant reduction in premiums when buying physical gold. Peter Fung of Wing Fung Precious Metals predicts a further increase in activity among consumers of the yellow metal.

Meanwhile, analysts at Citigroup reiterated their gold price target for the next 12 months at $3,000 per ounce. Deteriorated expectations about the scale of the Fed’s key rate cuts didn’t lead to a large-scale sell-off in the gold market, which indicates a stability of demand. Representatives of Citigroup believe the main reason for such price dynamics is the Chinese population, which now directs almost half of their savings to the market of precious metals.

In turn, UBS specialists raised their forecast for the gold price at the end of 2024 to $2600 from $2500 per ounce. Analysts of the Swiss bank revised expectations on demand for yellow metal from central banks. According to updated estimates, this year world’s regulators will buy not 800–850, but 950–1000 tons of gold. UBS recommends to open long positions on gold when the price falls to the level around 2300.

Stochastic indicator on the daily chart of gold shows oversold condition for the first time since December. A full-fledged reversal signal could be formed in the nearest future, increasing the chances of the rebound to the level of 2385.

The following trading strategy can be suggested:

Buy gold at the current price. Take profit — 2385. Stop loss — 2305.