Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
In recent days, gold prices experienced a temporary pullback after reaching record highs. However, traders and investors seem unruffled, instead patiently waiting for the next catalyst to push gold prices to new heights. Notably, gold prices hit a historic high of $2,560.30 just days ago, so the recent pullback is merely a minor fluctuation in its overall upward trend.
During early trading, December gold futures briefly fell to an intraday low of $2,504.40, but market participants quickly seized this buying opportunity. By the afternoon, prices had rebounded significantly, ultimately closing down only 0.15%. The slight dip in gold prices was mainly attributed to a strong dollar, with the U.S. dollar index rising 0.13% to 101.776.
Gold’s strong performance this year is due to multiple factors, suggesting there is potential for further price increases in the months ahead.
Goldman Sachs analysts recently noted that, among commodities, they are most confident in gold for a short-term rise, predicting prices could reach $2,700 per ounce by early 2025. The reasons include the doubling of global central bank gold purchases since mid-2022, which they view as structural. Additionally, an anticipated interest rate cut by the Fed is expected to lure Western capital back into the gold market, providing new upward momentum. Finally, gold offers significant hedging value for portfolios against geopolitical shocks.
Furthermore, UBS precious metals strategist Joni Teves highlighted several key factors supporting a gold rally: continued strong central bank purchases, robust physical demand, heightened macroeconomic uncertainty, and ongoing geopolitical risks. Teves pointed out that although higher prices might dampen gold imports and jewelry demand, fundamental demand remains strong.
In the first half of 2024, global net purchases of gold by central banks reached 483 tons, the highest on record. Recent data shows that in July, official global gold reserves increased by 37 tons, the highest monthly increase since January (45 tons), with a month-on-month increase of 206%. According to Krishan Gopaul, EMEA senior analyst at the World Gold Council (WGC), central banks have continued to accumulate gold in recent months.
The Fed’s policy shift has also played a key role in gold’s recent performance. In his speech at the Jackson Hole central bank symposium, Fed Chair Jerome Powell emphasized that with inflation expected to fall to the 2% target next year, the Fed’s focus has shifted to employment. Consequently, this week’s release of the nonfarm payroll report will be a market focal point.
Currently, the CME’s FedWatch tool indicates a 100% probability of a rate cut in September, with a 63% chance of a 25 basis point cut and a 37% chance of a 50 basis point cut.
