GOLD PRICE OUTLOOK:
- Gold prices fell as the US Dollar climbed, extending its downward trajectory
- Real yields rose on US infrastructure plan, weighing on bullion prices
- The world’s largest bullion ETF saw continuous outflows as investors turned to riskier assets
Recommended by Margaret Yang, CFA How to Trade GoldGet My GuideGold prices retreated for a second day as the US Dollar (DXY) index remained elevated alongside longer-term Treasury yields, potentially paving the way for further losses. Gold prices plunged more than 1% on Monday as hedge fund Archegos’ $20 billion forced liquidation sparked risk-off sentiment and sent the haven-linked US Dollar higher. The DXY US Dollar Index climbed to a four-and-half month high of 92.90, exerting downward pressure on precious metal prices. Silver lost 1.6%, platinum retreated 0.93%, and palladium plunged 5.2% on Monday and extended lower during Tuesday’s APAC session.
Looking ahead, Friday’s US nonfarm payrolls report will be closely scrutinized by gold traders as the figure may lead to higher volatility in both currency and precious metal markets. The market foresees 655k new jobs added to the labor market in March as the economy continues to recover from the pandemic. A stronger-than-expected reading is likely to strengthen the growth outlook and hint at a faster pace of Fed rate hikes, potentially leading to a stronger US Dollar. Under this scenario, gold prices are likely to weaken further. The opposite may happen if the data disappoints. The DXY US Dollar index displays a negative relationship with gold prices, with their past 12-month correlation coefficient standing at -0.58.
Gold vs. DXY US Dollar Index – 12 Months
Source: Bloomberg, DailyFX
Meanwhile, President Joe Biden will reveal a massive $3-4 trillion infrastructure and job-creating proposal this Wednesday. This has strengthened reflation optimism and led market to believe that more government bonds will be issued to fund fiscal spending in the future. As a result, the 10-year Treasury yield climbed to 1.744% - a 14-month high. The US real yield (nominal yield – inflation), represented by 10-year Treasury inflation-indexed securities, rose to -0.62% from -0.66% a day ago.
Rising yields may continue to weigh on precious metal prices as the opportunity cost of holding them rises. Real yields exhibit a historically negative correlation with gold, with their 12-month correlation coefficient standing at -0.86.
Gold Prices vs. 10-Year Treasury Inflation-Indexed Security
Source: Bloomberg, DailyFX
The world’s largest gold ETF - SPDR Gold Trust (GLD) – saw continuous net capital outflows over the past few months. The number of GLD shares outstanding declined to 355.9 million on March 29th from a recent high of 407.1 million observed on January 4th, marking 51.2 million shares of net outflow over three months. Gold prices have fallen by 11.8% during the same period, suggesting that capital was fleeing from the yellow metal into riskier assets looking for yield and growth. Gold prices and the number of outstanding GLD shares have exhibited a strong positive correlation of 0.89 over the past 12 months (chart below).
Gold Price vs. GLD ETF Shares Outstanding – 12 Months
Source: Bloomberg, DailyFX
Technically, gold prices broke decisively below a minor “Ascending Channel” on Monday, suggesting that near-term trend has likely turned bearish (chart below). Near-term momentum has flipped downward as the MACD indicator formed a bearish crossover. Breaking below a psychological support level of US$ 1,700 would likely intensify near-term selling pressure and bring the next support level of US$ 1,676 (previous low) into fucus. The overall trend remains bearish-biased as suggested by downward-sloped moving averages.
Gold Price – Daily Chart
GoldBearishData provided by of clients are net long. of clients are net short. Change in Longs Shorts OI Daily5%2%4%Weekly6%-1%2%What does it mean for price action?Get My Guide IG Client Sentiment indicates that 85% of retail traders are net-long with the ratio of traders long to short at 5.66. The number of traders net-long is 5% higher than yesterday and 1% higher from last week, while the number of traders net-short is 10% lower than yesterday and 21% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are leaning heavily to the long side suggests that gold prices may continue to fall.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a strong gold-bearish contrarian trading bias.
Recommended by Margaret Yang, CFA Building Confidence in TradingGet My Guide--- Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
FAQs
Gold prices are expected to climb to $2,500/oz by the end of 2024, according to J.P. Morgan Research estimates. This prediction assumes a Fed cutting cycle commencing in November 2024, pushing gold prices to new nominal highs.
How much will gold be worth in 2025? ›
Gold Price Forecast Summary
Year | Forecast Range | Key Factors |
---|
2025 | $2,300 – $3,000/oz | High demand in physical markets Middle East and European conflicts |
2026-2030 | $1,600 – $3,000 General sentiment: Upbeat trend | Geopolitical tensions Economic trends |
1 more rowJun 25, 2024
Why is gold ETF going down? ›
This may explain why ETF buyers may not be too enthusiastic about its recent increase in valuation, as when coupled with lack of periodic cash flows, higher than average management fees and the fact that gold has little industrial value (unlike silver), the commodity is likely to remain less attractive for retail ...
What are gold price predictions? ›
Gold's price forecast for Q1 2024 at Bloomberg Terminal is between $1,913.63-$2,224.22. Goldman Sachs commodity analysts expect the potential upside of the gold price to be closely tied to changes in US interest rates and dollar movements, leading them to raise the gold price target for 2024 to $2,050 an ounce.
Will gold go up to $3,000? ›
"Since the year 2000, gold has had a compound annual growth rate (CAGR) of 8.8%. If this carries forward, gold will exceed $3,000 by 2027," says Yip, who notes that during the same period, there have been seven years where gold saw a return of more than 20%.
How much will an ounce of gold be worth in 2030? ›
What is the future for Gold?
Year | Gold Price Prediction |
---|
2028 | $5,012 |
2029 | $8,932 |
2030 | $9,326 |
2031 | $10,278 |
5 more rowsJul 12, 2024
How much will 1 ounce of gold be worth in 5 years? ›
Considering gold's historical annual growth rate of 11.2%, an ounce of gold could potentially be worth about $3,441 in five years from its 2023 value of $2,024 per ounce. This estimation assumes that gold continues to grow at its average historical rate.
How much is gold going to be worth in 10 years? ›
Vijay Marolia, money manager and managing partner at Regal Point Capital, expects the price of gold to be "at least" $3,000 an ounce in 10 years (the price of gold today is around $2,000 an ounce).
Is it a good time to sell gold? ›
In general, gold prices are relatively high right now. You can make money by getting cash for gold at this present moment. Nevertheless, there are many other things to consider before you liquify your gold assets.
Can gold ETF go to zero? ›
Can a ETF price go to zero? - Quora. Yes. Some infamously came very close in early 2018 when funds that shorted a volatility index were crushed as the low volatility environment of 2017 came to a sudden end. The prices of some of these funds crashed and they were closed.
In general, gold ETFs offer some tax advantages and lower costs over time than trading physical gold. Below, we will guide you through your options for each, giving you a better sense of which, if either, works best for your portfolio.
What is the problem with gold ETFs? ›
Let's take a look at why you should avoid this type of ETF and place your money elsewhere.
- You Don't Actually Own Gold. The fact that investors don't even get to own any gold is brimming with irony. ...
- ETF Fees. ...
- Counterparty Risks. ...
- Significant Market Risk.
What month is best to buy gold? ›
Historical gold price averages over the past 50 years indicate the best time of year to buy gold is at the start of each calender year and again in the middle of summer, early July. Prices have tended to push higher at the fastest rate after these periods.
Which country has cheapest gold? ›
Hong Kong could be the country with the cheapest gold price in the world. You can walk into a number of banks and purchase gold coins, often with a lower premium compared to other countries.
What is Goldman Sachs gold price forecast for 2024? ›
Goldman Sachs predicts an average gold price of $2,133 per ounce in 2024. JPMorgan Chase & Co. predicts the gold price to reach $2,175 per ounce in 2024. ABN AMRO has a gold prediction of an average price of $2,000 per ounce in 2024.
What will be the price of gold today in 2024? ›
gold Rate in India for Last 10 Days (10 GM)
Date | 22 Carat | 24 Carat |
---|
2024-07-23 | ₹62,993 (3887) | ₹68,720 (4240) |
2024-07-22 | ₹66,880 (238) | ₹72,960 (260) |
2024-07-21 | ₹67,118 (18) | ₹73,220 (20) |
2024-07-20 | ₹67,100 (0) | ₹73,200 (0) |
6 more rows
How much will gold be worth in 5 years? ›
According to the latest long-term forecast, gold price will hit $2,627 by the end of 2025 and then $2,676 by the end of 2026. Gold will rise above $3,000 within the year of 2027, $4,500 in 2030 and $5,200 in 2033. This is one of the most bullish gold rate forecast for the next 5 and 10 years.
When to buy gold in 2024? ›
List Of Best Days To Buy Gold In 2024
Auspicious Occasion | Date |
---|
Akshaya Tritiya | 10th May 2024 |
Navratri | 9th April to 17th April 2024, 3rd October to 11th October 2024 |
Dussehra | 12th October 2024 |
Dhanteras and Diwali | 29th October 2024 and 1st November 2024 |
4 more rowsJul 5, 2024
How high will silver go in 2024? ›
The silver price forecast is revised upward, anticipating silver to average $30/oz in 2024. A higher price of silver could drive investment in silver-backed ETFs. Supply deficit due to continued decline in silver mine production could support silver price.