As of 3:02 p.m. ET spot gold was within spitting distance of its all time high ($2048), reaching $2041.51 per ounce, marking its highest point since May 11, 2023. Spot silver is also trading at a short term peak at $24.98 / ozt.
In the short term, gold maintains a bullish trend, with the dollar index showing a downtrend amid expectations that the Fed will refrain from further interest rate hikes and may even consider rate cuts by spring, as noted by Jim Wyckoff, senior analyst at Kitco Metals.
However, if GDP, inflation, or employment numbers over the next week or two come in stronger that traders expect, it may cause a temporary retreat in the yellow metal. On a short term basis, both gold and silver are now in "over-bought" territory.
The main driver over the past week has been growing expectations for the Fed to start cutting interest rates in the March-May time frame of 2024.
Lower real interest rates make holding physical gold more palatable to investors.
U.S. Fed Governor Christopher Waller expressed increasing confidence that policy is appropriately positioned.
The dollar index, reaching its lowest point since mid-August, has made bullion more affordable for international buyers, and continued geo-political tensions encourage US investors to continue buying gold as a hedge.
Investors will closely watch Thursday's U.S. Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation gauge, along with the revised U.S. third-quarter GDP figures scheduled for Wednesday. The employment situation report comes out Friday, Dec 08 at 8:30 a.m. Eastern time. All three of these reports have the potential to move the gold price dramatically.
"A sense of caution ahead of another busy week for global financial markets is also lending support to the precious metal. Given how the $2,000 level proved an extremely tough resistance to conquer, gold could end up dipping without a potent fundamental catalyst," highlighted FXTM senior research analyst Lukman Otunuga.
Dan Barrett from Pacific Precious Metals continues to believe that owning some physical gold is a prudent strategy when protecting one's wealth.
Dan Barrett is the Chairman of Pacific Precious Metals and the Founder of the Aureus Point-of-Sale system, a software platform made for bullion and coin dealers. He has been investing in physical gold and silver for over 15 years. His prior experience includes being an Analyst for a variety of Banks and Hedge Funds.
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