Gold Prices Reach All-Time High: What’s Next?
The Gold Rush era refers to a period in the mid-19th century when, especially in the US, people migrated to areas where gold had been discovered, with the hope of mining the precious metal. This week, traders had the chance to see gold hitting an all-time high as investors rushed to open positions, boosting gold’s general upward trajectory.
As discussions over gold prices have become a trend among economists, in this article we will see the latest developments regarding gold and review analysts’ forecasts.
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Gold Prices Rise And Hit An All-time High
On April 10th, gold prices hit an all-time high rising above the $2,350 mark. It should be noted that gold was trading at around $2,020 per ounce in the first days of January 2024. Gold started gaining momentum in mid-February, rising from around $2,000 per ounce to over $2,200 in late March.
Metal market analysts suggested that traders increased their positions on gold as other assets felt the pressure of geopolitical tensions and the uncertainty over the Fed’s monetary policy in the next months.
Earlier this week, investment strategists at Swiss Asia Capital told CNBC reporters that gold could hit the $2,600 this year. “If you look at your forward curve for a year it’s about 26 [$2,600]. I think we might be really fast as we take 23 [$2,300] out, it has a lot of pent-up demand,” they noted. Commenting on gold prices, they also suggested that a potential “short squeeze” could lead prices even higher.
ING: Pullback In the Future?
Economists at the Dutch ING bank stress that, for the time being, ETF holdings don’t seem to follow the gold prices’ rise. They also mention that gold remains overbought and may suffer a pullback depending on financial reports related to the US economy.
“Gold remains in overbought territory and so there is certainly the potential for a pullback in the short term. Meanwhile, ETF holdings in gold continue to not align with price action. ETF holdings continue to decline with them standing at around 82moz, down from 85.6moz at the start of the year. Over the same time period, spot gold prices are up around 9%. There is plenty of room for investors to buy the gold market, but maybe we need to wait for the Fed to actually start cutting rates before investors jump fully into the market,” they note in their report.
OCBC Bank: Market Conditions Work In Favour Of Gold
Market analysts at OCBC Bank said that a less restrictive rates environment could prove beneficial for the popular metal. Commenting on gold, they said that there is a risk of a pullback.
In their report, they wrote: “We continue to maintain a constructive outlook on Gold on expectations that real rates should eventually correct lower (especially after the recent rise). This should happen when the Fed embarks on rate cut cycle in 2Q24. To add, Gold’s risk-off hedge (safe haven proxy) against geopolitical risks and portfolio diversifier is now playing up. But near term, we do not rule out the risk of pullback given the rapid breakout while long Gold positions in CFTC have hit record highs.”
UBS: Questions Remain About Gold’s Trajectory
In a note to investors, UBS strategists suggested that fundamental support for the gold may be easing off, but prices still rise. “The rally is now facing diminished fundamental support. Despite this, questions remain about the metal’s near-term trajectory as the headwinds … have not managed to unsettle the rally,” was noted, adding that purchases of gold in China may have given a boost to gold prices.
Trading Gold With Admirals
Gold is the most popular metal among traders around the world. Beginner traders could be influenced by the vast quantity of information regarding gold and start building their strategies around it. Although at Admirals you can trade gold against the US dollar (Gold), the euro (XAU/EUR), the Australian dollar (XAU/AUD), there are some things that beginner traders should consider before embarking on this experience.
The lack of experience could be one of the factors to lead to a strategy’s eventual failure. Receiving some training on trading and making good use of educational materials provided by some brokers could be the next step. Watching webinars prepared by experienced traders or reading educational articles and guides could help you upgrade your trading skills with less cost than perhaps you imagined.
In order to mitigate risks, beginner traders should learn how to use risk management tools. The stop loss order and the take profit order are the most known risk management tools that brokers offer traders via their platforms. Depending on the circumstances, these two types of orders could help you navigate markets with less exposure to risks.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
