At any point, gold looks like it could bust through the $1,800 price ceiling it can’t seem to break, and it could have the tailwinds to do so before the end of the year.
A key driver for gold will certainly be how the Federal Reserve reacts to the latest inflation numbers. With consumer prices rising, gold looked like it was poised for a comeback, but cooling inflation dampened that rally quickly.
“Gold is toying with $1,800/oz following the marginally weaker-than-expected U.S. inflation data,” said Suki Cooper, precious metals analyst at Standard Chartered Bank. “The macro backdrop remains conducive for further price gains.”
The U.S. core Consumer Price Index ticked higher by just 0.1% in August, which missed the forecasts of 0.3%. This gave the greenback more investor confidence, but bullish gold investors are hoping that future rate hikes could provide tailwinds for the precious metal.
“While a tapering announcement is unlikely until the November FOMC meeting, the September meeting will introduce the staff forecasts, or ‘dots’ for 2024. The 2024 dots could mirror 2023′s two rate hikes,” Cooper added.
From a technical standpoint, the magic number range, according to strategists at Credit Suisse, is the July/August highs pegged at $1832/34. They also noted that bearishness could be ahead if gold prices fall below $1775.
For a full-on breakout towards a recovery, the number would be $1834.
“Gold extends its consolidation beneath the July and August highs at $1832/34. Below $1775 can reassert a negative bias again for a fall back to $1691,” they said.
Get Physical Gold Exposure Without the Hassle
Exchange traded funds (ETFs) provide a way for investors to get gold exposure without the hassle of purchasing and storing gold bars. ETFs like the Sprott Physical Gold Trust (PHYS) can accomplish just that with a low expense ratio of 0.42%.
PHYS primarily invests in physical gold bullion in London Good Delivery bar form. The Sprott Physical Gold Trust was formed on August 28, 2009 and is domiciled in Canada.
“The Trusts’ precious metals are fully allocated which provides the Trusts with direct beneficial ownership,” Sprott mentioned on its website. “Unlike other bullion funds, the Trusts do not have an unallocated account that is used to facilitate transfers of bullion between financial institutions that act as authorized participants. Without exception, all of the bullion owned by the Trusts is held in the Trusts’ allocated accounts in physical form.”
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