One of the questions investors are pondering after the price of gold hit record highs one after the other this week is, will the price of gold take a breath next week?
After all, after an impressive seven consecutive gains, the price of gold has touched a new all-time high of $2,203 per ounce, and there may be a need for some consolidation in the short term. However, many analysts believe that this is not the end of gold’s uptrend.
The April gold futures contract on the New York Mercantile Exchange closed at $2,184.80 per ounce today (8 March), which is still the highest gold price close since July 2020, although it retreated from its intraday high. The precious metal continued to post a 4% gain for the week compared to a week ago.
TD Securities announced today that it will be taking profits on its month-long tactical long position to capture a 7% gain. Analysts believe that while prices may continue to swing higher from current levels, they will face greater volatility.
Chris Vecchio, head of futures and foreign exchange at Tastylive.com, said he had also taken profits for the time being as the market should need some time to “take a breath”. However, he stressed that this is only the beginning of the gold rally, and the most important thing for investors is to recognize when to take profits. Gold’s movement is based on the expectation that interest rates will be lowered globally. At the same time, debt levels are rising to unsustainable levels.
A key factor driving gold prices to record highs on Friday was disappointing US jobs data, which was revised down by 167,000 in January and December combined, despite the US economy creating 275,000 jobs last month.
Meanwhile, the unemployment rate rose to 3.9% and payroll growth slowed, suggesting the labour market is gradually losing steam. Following the release of the jobs data, traders raised their bets for a June rate cut. Currently, the market sees more than a 70 per cent chance that the Fed will ease policy in June.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said that the year-end target of $2,300 for gold prices now looks more promising.
Meanwhile, financial website Forexlive predicts that gold will rise above $2,200 in the first half of 2024 and could break through $2,300 in the second half. Research firm Finbold is also bullish on gold rising to $2,300 this year, saying the price will fluctuate between $1,830 and $2,300 an ounce this year. Techopedia also expects to see $2,300 an ounce, citing stable inflation, interest rate cuts and ongoing geopolitical tensions, as well as strong purchases from central banks as reasons for the bullishness.
Lukman Otunuga, Senior Research Analyst at FXTM, said, “In the week ahead, it will be worth keeping a close eye on a number of important data releases from the US, including the latest CPI report. Turning to the technicals, gold is trading around the unknown zone, with the next psychological position at $2,200. If the bulls decide to take a breather, it could trigger a pullback in gold to $2,150.
