The Gold Market in February 2024

Consolidation in the gold market has been ongoing for several weeks. Despite significant daily fluctuations, gold remains in a relatively narrow trading range of $2,000-2,055/oz.

After several attempts to fluctuate, the prices quickly reverted to their original levels. Despite a slowdown in growth rate and a certain strengthening of the US dollar, the price of gold has successfully maintained its position above the psychological threshold of $2,000/oz.

The Optimistic Outlook

This period of consolidation is viewed as laying the groundwork for future growth. The large increase in purchasing of gold after gold’s significant rise in October and November 2023 is now diminishing. This indicates that the price of gold is starting to stay steadily above $2,000 per ounce.

The Pessimistic View

The gold market is increasingly stagnating, and neither geopolitical tensions nor the emerging banking crisis can inject new momentum for growth. This situation is leading to a growing sense of ennui among investors.

It’s worth mentioning that this “boredom” is not unique to gold but is also prevalent across other financial market sectors. However, given the surge in insider sales, it’s uncertain how long the enthusiasm for artificial intelligence and the success narratives of American giants like Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla will persist.

The Future

According to the renowned investor Paul Tudor Jones, the US economy, fueled by steroids of massive government spending, is teetering on the edge of a debt crisis poised to erupt.

The critical moment for precious metals, he suggests, will come when the US Federal Reserve and Central Banks is compelled to initiate a new round of bailouts and slash interest rates in response

Since the 28th December, following the autumn rally, the gold market price has experienced a tumultuous consolidation, settling into a pronounced sideways trend. Despite some instances of significant intraday volatility, the overall market has seen a noticeable decrease in turbulence, with few standout moments for gold bullion market since the start of the year. Each time it appears that gold prices might decisively break out in either direction, a new obstacle emerges, primarily affecting short-term traders. In contrast, long-term investors have shown resilience to these fluctuations.

A weekly close above $2,065 per ounce could signal an uptrend breakout. Conversely, a daily close below $2,000 per ounce might confirm the upward trajectory of the slowly ascending 200-day average at $1,966 per ounce. Short-term, analysts still envision a potential rally to the upper resistance levels between $2,045 and $2,060 per ounce. It’s important to note, however, that starting 10th February, the gold market will temporarily lose physical demand from a major consumer, Shanghai, due to the Chinese New Year celebrations. In the absence of physical demand from Asia, it will be easier for paper gold traders to temporarily depress physical gold prices.