Kitco analyst Neils Christensen has written an article titled "Gold prices consolidating slightly below $2000, sandwiched between opposing forces" on recent gold trends, providing in-depth analysis of gold trends.
Christensen stated that due to rising political uncertainty leading to a recovery in safe haven demand, gold prices have risen to around $2000 per ounce, and sentiment in the gold market has clearly turned bullish. However, some analysts warn that prices are a bit overly tight and may start a new consolidation mode. Analysts say investors and traders need to closely monitor the support level around $1950 per ounce. The gold price has successfully held the initial support, but some analysts said that since the US bond yield remains at a high level slightly below 5%, the US $2000 may provide short-term resistance.
December gold futures closed at $1991.30 per ounce on Wednesday, up 0.46% on the same day.
Ricardo Evangelista, Senior Analyst at ActivTrades, stated that, The price trend of precious metals has fallen into a struggle between two opposing forces. On the one hand, despite increasing hopes for a diplomatic solution, political instability and the threat that the conflict between Israel and Gaza may envelop the entire region continue to drive safe haven demand for precious metals. After the disappointing PMI data released on Tuesday, concerns about a European economic recession have intensified this trend, "However, after the release of better than expected US economic data led to the overnight strengthening of the US dollar, which supported the yield of US treasury bond bonds and weakened the attractiveness of non yielding gold, the upward space of gold was limited.
FxPro Senior Market Analyst Alex Kuptsikevich said that although Tuesday's sell-off helped cool the market, he does not believe that the selling pressure has completely ended. He pointed out that since the bond yield is close to 5%, the US treasury bond bond may become a noticeable safe haven asset and compete with precious metals. Although we often hear that rising government bond yields are detrimental to gold, it is unlikely that a large amount of capital will buy into a falling market to avoid catching a falling knife. The signs of bottoming out may trigger a significant shift in overwhelming trading, triggering capital to flow from gold into bonds, "he said, "A year ago, this shift was the beginning of the stock market reversal and the weakening of the US dollar. Now it may be the emergence of interest in defeated long-term US bonds, which has damaged gold and possible stocks, whose yields are now lower than most debt market securities.
Darin Newsom, a senior market analyst at Barchart.com, warned investors in a social media post that precious metals look "a bit tired". He said, 'The daily random indicators are in an overbought state. All of this will be held before the Federal Reserve meeting next week.'“
Christensen pointed out that although gold is attracting strong safe haven demand, some analysts say the hawkish Federal Reserve continues to pose risks to precious metals. The market expects the Federal Reserve to maintain interest rates unchanged next week; However, it is expected that the hawkish stance of long-term rise will continue to support higher bond yields and strengthen the US dollar, which are two traditional resistance to gold.
Although some analysts remain cautious about gold, others suggest that investors should not overlook the market momentum.
In a recent interview with Kitco News, Trade Nation senior market analyst David Morrison stated that the recent rebound has broken through all major resistance levels. I think the market wants to see $2000, although the price can consolidate, it may be the driving force behind the market reaching a historic high. Morrison said that although the Federal Reserve does not intend to cut interest rates soon, the end of the tightening cycle does provide some support for the future of gold.
Meanwhile, Morrison added that as investors begin to focus on potential debt issues in the United States, the negative correlation between gold and bond yields may continue to remain weak. "$33 trillion is a very convincing reason why you don't want to hold US treasury bond bonds now," he said. Debt was not important before it happened, and now it is
