Gold Market has Regained Composure
2024-11-19
Summary:
Gold extended its rally as the US dollar cooled and Russia-Ukraine tensions boosted safe-haven demand after six days of losses.
Gold prices extended their rally from Monday, after six days of losses, as the US dollar's surge cooled and heightened uncertainty over the Russia-Ukraine conflict rekindled safe-haven demand.
Gold experienced its largest loss in over three years last week, largely due to Trump's "America First" policy, which could hinder the Fed's rate-cutting cycle. Additionally, his endorsement of Bitcoin has dampened gold's appeal.
In contrast, physical gold premiums in India surged to a near four-month high, driven by a rebound in demand as prices dropped. However, retail buying in China, the top consumer of gold, remains subdued.
US President Joe Biden has approved the use of long-range missiles by Ukraine, a move that has escalated tensions with Russia, as President Putin had previously warned against such action.
Gold prices are expected to reach $3,000 next year, driven by central-bank buying and monetary easing, according to Goldman Sachs. The bank highlighted gold as one of its top commodity trades for 2025, with potential for continued gains under Trump's presidency.
However, Goldman Sachs also suggested that the US dollar is likely to remain strong for an extended period. As for the euro, it is predicted to decline to $1.03 in the next 12 months, while the yen is expected to weaken to 159 per dollar.
Bullion managed to reclaim the $2,600 level, but it needs to break above 50 SMA to reverse the downtrend. If that does not materialise, we see a drop towards $2,550 as likely.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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