While precious metals traders did ride some peaks and valleys this week, gold prices repeatedly returned to the $2,645 per ounce price level like a magnet, reinforcing the prevailing view that the market is in a holding pattern ahead of 2025.
Spot gold kicked off the week trading at $2,648.65 per ounce before sliding precipitously to $2,623 by early Monday morning, a low that ended up holding until Thursday evening. The Asian and European sessions then managed to erase all of gold’s earlier losses, and by 9:00 a.m. EST, spot gold hit $2,650 per ounce for the first time. That peak proved short-lived, however, as the yellow metal then proceeded to bounce off $2,635 per ounce a number of times.
By 1:00 a.m. EST on Tuesday, the price was once again testing $2,650 per ounce, and thereafter, spot gold traded in a relatively narrow range between $2,653 and $2,640 for the next two days.
Thursday morning brought the last bit of real drama for precious metals traders after another failed attempt to break above the weekly high resulted in spot gold falling from $2,653 at 7:45 a.m. EST all the way to $2,625 shortly after noon, before setting what proved to be the weekly low of $2,615 per ounce by 8:00 p.m. EST Thursday evening.
As was the case on Sunday evening, however, gold’s recovery was just as sharp as its decline, as spot gold spiked back above $2,642 per ounce by 11:00 p.m. EST, and even a somewhat stronger-than-expected non-farm payrolls report only knocked the yellow metal down to $2,628, after which it rebounded right back to $2,640 by 11:45 a.m. EST.
Gold prices then trended sideways within a narrow nine-dollar range for the duration of Friday’s trading session.
The latest Kitco News Weekly Gold Survey showed industry experts again divided evenly between bullishness and consolidation, while retail traders returned to their bullish baseline sentiment.
“I like gold higher next week, as long as $2600 holds,” said Marc Chandler, managing director at Bannockburn Global Forex. “Three G10 central banks will cut rates and the market suspects two (Bank of Canada and the Swiss National Bank) may cut by 25 bps.”
“Downtrend line from the record high at the end of October comes in near $2680 on Monday and falls to around $2660 at the end of next week,” he added.
Christopher Vecchio, head of futures strategies and forex at Tastylive.com, is bearish on gold in the near term as “speculative positioning remains elevated.” Vecchio added that he still sees risk due to profit-taking after the yellow metal’s very strong year.
“I am bullish on gold for next week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, who switched from his neutral position last week.
Rich Checkan, president and COO of Asset Strategies International, said the NFP numbers should support the expected rate cut from the Fed, which is positive for gold.
“Given today’s mildly positive labor numbers, the markets will be expecting a further 25-basis point rate cut when the FOMC meets on the 17th and 18th,” he said. “Therefore, I would expect to see gold prices to increase slightly over the next week in anticipation of this ‘good news’ for precious metals.”
“The renewal of hostilities in the Middle East and the issues in France don’t hurt gold’s case either,” Checkan added.
Jesse Colombo, founder of the BubbleBubble Report, is neutral on gold for next week, but he noted that the market remains in a bullish uptrend.
“Sideways,” said Darin Newsom, senior market analyst at Barchart.com. “February gold is trending sideways on its daily close – only chart between the recent low of $2,642.60 (November 25) and high of $2,681.00 (November 29).”
“Given the potential for increased chaos around the world (e.g. Syria), I don’t see gold breaking down short-term,” Newsom said. “However, Feb’s weekly close-only chart does show an intermediate-term downtrend so eventually I’m expecting a bearish breakout on the daily chart.”
Kevin Grady, president of Phoenix Futures and Options, said markets are in a kind of limbo as they wait for next week’s inflation data, and then for the new U.S. government to take office.
“You have two administrations that are basically running side by side right now,” Grady said. “It looks like Biden’s kind of taking his foot off the gas, and Trump is full steam ahead. We’re learning a lot about potential tariffs. We’re learning a lot about nomination picks. That’s all the information that right now the market is trying to digest, and I think gold is acting accordingly. The one thing I have said is, I still believe that we’re having these levels where the strong hands are in the market and they’re not getting out.”
“For next year, I’m bullish,” Grady added. “I think we’re going to be seeing $3,000 [per ounce gold] next year. I think that the environment is going to be ripe for it.”
Grady said the recent run-up in the price of Bitcoin, which broke above $100,000 for the first time this week, is actually a positive for gold.
“When you look at Bitcoin, that’s a global commodity, and it’s a large groundswell of people that want an independent currency, an independent vehicle that’s not going to be able to be manipulated, and that’s why there is some sort of need for that. I think that bodes well for gold.”
Grady said he disagreed with Fed chair Powell’s comments from Wednesday that gold and Bitcoin are in competition with one another. “Some people are saying they have to be in opposition,” he said. “I don’t necessarily think so. I think it’s the same mindset, I just think it’s a different investor. You’re seeing a lot of the younger people going towards Bitcoin. I think you’re seeing some of the more seasoned investors going towards gold. But ultimately, I think it’s the same message.”
Looking ahead to the last FOMC rate decision of 2024, Grady said he doesn’t expect any big surprises from the data or from the Fed, and he doesn’t foresee a big move in gold either.
“I don’t know if you’re going to see [a big price move] prior to the end of the year,” he said. “I would be surprised if you did. I think people are going to try to wait and see what happens, because in order to do that, you’re going to have to be taking on new longs, new positions. If someone comes in and does that right now, I think it’s going to be speculators, and they’re easily driven out. I’m not necessarily looking for a big move prior to the end of the year.”
“Everybody wants to see the inflation numbers,” Grady added. “It’s like Trading Places, everyone’s waiting, and let’s see what these numbers come out to be. I think that’s what’s going to direct everything. So once those numbers go out, we’ll see where the market settles. And then after that, I think you’re going to be stuck in a pretty tight range.”
“The markets have been active for us this first week, very active, actually,” he said, “but I think that it’s probably going to go up until about maybe the third week, and then the market should usually slow down.”
This week, 12 analysts participated in the Kitco News Gold Survey, with Wall Street sentiment remaining once again split between optimistic and wait-and-see attitudes. Five experts, or 42%, expected to see gold prices rise during the week ahead, while another five, or 42%, predicted further consolidation for gold. The remaining two experts, representing 17% of the total, expected to see lower prices for the precious metal.
Meanwhile, 116 votes were cast in Kitco’s online poll, with Main Street warming up to the yellow metal once again after this week’s resilient performance. 70 retail traders, or 60%, looked for gold prices to rise next week, while another 23, or 20%, expected the yellow metal to trade lower. The remaining 23 investors, representing 20% of the total, expected gold’s sideways trend to continue in the near term.
Next week’s economic news will revolve around key domestic inflation data in the U.S. and central bank rate decisions outside the United States.
Monday will see the Reserve Bank of Australia deliver their monetary policy decision, while the Bank of Canada’s monetary policy decision will come on Wednesday, followed by the European Central Bank and Swiss National Bank rate announcements on Thursday.
North American traders, however, will be focused on the release of inflation data with the release of U.S. CPI on Wednesday and PPI on Thursday, both for November, with the Federal Reserve’s rate announcement coming the following week.
Mark Leibovit, publisher of the VR Metals/Resource Letter, is predicting gains for gold prices next week, but he’s not entirely convinced of the yellow metal’s near-term strength. “Giving the upside the benefit of the doubt, but I’m nervous,” he said.
Daniel Pavilonis, senior commodities broker at RJO Futures, agreed that the gold market is in a holding pattern as it awaits the Trump administration, and barring a major international escalation, he doesn’t see much potential for a breakout.
“It seems like we’re just hanging out here,” he said. “We’re waiting for some kind of geopolitical play, which I think would push this thing up high.”
Pavilonis was also revisiting some of the initial assumptions of the ‘Trump trade’, particularly the idea that the President-elect’s international trade policies would necessarily be inflationary and therefore good for gold.
“I think that the idea was that this thing is going to be very inflationary, with tariffs and everything,” he said. “But if you really read into it, what they propose to do is lower taxes for businesses that build stuff here in the U.S. and raise tariffs on companies that want to build outside of the U.S. and sell to the U.S.”
“I think it’s maybe neutral to somewhat bearish for inflation.”
Pavilonis said a lot is still to be seen on how the tariffs will unfold, but the two sides of the inflation story could end up canceling one another out. “Unless there’s some kind of rebound in inflation, unless there’s some kind of geopolitical risk where things start to go out of control, with Iran or something of that nature, then maybe this is it for gold for a little while.”
“It just seems like the moving averages on the daily charts are starting to get weaker and weaker,” he added. “They’re not as strong as where we were back in October. November, it was risk-on and then it sold off,” he added.
“We’re just hanging out here, and I think the longer that we hang out here, I think you might start to see some selling, some profit-taking, some risk-off, and for the market to come back lower.”
In terms of the Federal Reserve rate announcement, Pavilonis thinks the expected December cut will be the last one for some time.
“I think this quarter-point might be it for a while, and then they just wait and see how things go,” he said. “CPI, PPI, I think are going to be in line, I don’t think they’re going to be surprise numbers. I could be wrong, but I don’t see a big turnaround. If you look at commodity prices, even retail sales and inventories that are being built up, inventory stocks, I think we’re obviously still elevated in places, but not nearly as much as what we’ve been seeing, like what we saw a couple of years ago.”
“I think the Fed is just going to pause for a little bit to see how things play out,” he added. “They’re obviously not restrictive. The stock market is still screaming higher, and prices at the pump have come off. Why do you have to lower it here? It’s not really helping out.”
“Look, this is probably where the market historically is, this is just a neutral rate, whether the Fed wants to say that or not,” Pavilonis said. “This is just where we are.”
“In terms of gold, I don’t know what the theme is going to be to really drive this thing,” he said. “I think that’s the big question right now, and that’s why the market is really just neutral.”
“I am bearish here,” said Michael Moor, Founder of Moor Analytics. “The trade below 26602 (+1.6 tics per/hour) projects this downward $23 minimum, $116 (+) maximum — we attained $24.6 so far. Decent trade back above where this comes in at 26643 (+1.6 per/hour starting at 11:20 am EST) will warn of renewed strength. ‘Decent’ is $8.8 today.”
“In a higher timeframe, we are still in an overall bull trend from November 2015, and likely in the later stages,” he added. “Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4 – of which we have attained $653.4 so far. These are ON HOLD.”
“In a Medium timeframe, the trade below 27730 brought in $231.5 of the pressure warned about, the trade below 27539 brought in $212.4 of pressure, the trade below 27141 projected this downward $95 (+) and we attained $171.9,” Moor said. “These are OFF HOLD on 11/18.”
And Kitco Senior Analyst Jim Wyckoff thinks gold will continue to trend in a consolidation pattern next week. “Choppy and sideways as traders await the next major fundamental catalyst,” he said.
At the time of writing, spot gold last traded at $2,633.02 per ounce for a gain of 0.04% on the day but a loss of 0.60% on the week.
Source: Ernest Hoffman Kitco
