Gold Futures Close at Record High, Next Week Crucial to Short-term Trend

Published on: Mar 1, 2024
Author: Caroline Kong

Gold futures closed at a record high on Friday (1 March), just one step away from $2,100 per ounce, as weak performance in US economic data triggered a fall in both the US dollar and Treasury yields, driving investment demand for gold higher.

The April gold futures on COMEX closed at $2,095.70 today, a new record and more than 2 per cent higher than last week. On Thursday, the price of gold broke through initial resistance at $2,050 an ounce and began to rally after the Federal Reserve’s preferred inflation gauge showed a benign rise in consumer prices.

This week was also the best week for gold since November.

Meanwhile, silver also ended the week with a 1 per cent gain, with prices back above $23 per ounce. Although silver continues to underperform gold, some analysts say it remains an attractive value investment in a bull market, and that silver typically performs later than gold.

Alex Kuptsikevich, senior market analyst at FxPro, said Thursday and Friday’s gains had demonstrated gold’s ability to rise above its 50-day moving average after a failed attempt to break above a month ago, which is a strong technical bullish signal. Kuptsikevich reminded investors to keep an eye on the next major resistance level at $2,088, arguing that if this momentum continues, the market could see a significant uptick.

Nicky Shiels, head of metals strategy at MKS PAMP, noted in a report on Thursday that the external move in gold could be the result of a months-long consolidation. External momentum could push gold prices higher, but fundamentals remain intact for now, she said. Coupled with the delay in the timing of the Fed’s interest rate cut. Technical rebound signals are difficult to attract the interest of new investors, therefore, gold price may continue to be in a stalemate next week.

Market analysts at CPM Group are also not optimistic that the gold market can hold on to Friday’s gains. Analysts wrote in a report to clients on Friday, every time the gold price test resistance level, most investors will sell gold, and when the gold price test strong support level, investors will return to the market, once again, which makes the gold price has been in a wide range of oscillation.

Analysts believe that as it tests $2,100, it is unclear whether gold prices will continue to climb in the near term, considering that gold has made strong gains this week, suggesting that profit-taking could lead to a short-term pullback.

Some analysts note that gold could face a major test next week with the release of the February non-farm payrolls report (8 March). Meanwhile, the market will be paying close attention to Federal Reserve Chairman Jerome Powell’s congressional testimony statement next week.

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