In a dramatic trading session on Monday, investors saw gold initially leap by more than 3% in Asia overnight to hit a new record high of $2,136 per ounce, before closing down by 2.5% on the North American market.
The latest gold rally has been fueled by speculation that the Fed will start cutting rates as early as March 2024. Furthermore, the price was temporarily lifted by a news report on Sunday that an American warship had been attacked in the Red Sea, which later proved to be false (the ship had come to the rescue of two commercial ships being attacked in the area).
Fed Chairman Jerome Powell did say on that Friday it would be "premature...to speculate on when policy might ease." Core inflation is still well above target, he said. He repeated that the Fed would raise rates further if necessary.
The wars in both Gaza and Ukraine grind on, supporting a geopolitical risk price floor for gold. The White House did issue an urgent warning to Congress on Monday about Ukraine's need for additional aid for its war against Russia. The Office of Management and Budget Director delivered a letter to congressional leaders stating that the United States is "out of money to support Ukraine in this fight." Certainly, a development to watch.
Despite gold’s pullback in the last 24 hours, it’s important to note that the yellow metal did record its all-time record monthly close on November 30th. The spot gold price closed at $2040. This was the highest monthly close ever for the gold price, and the first monthly close ever above $2000. The previous all-time high monthly close was April 2023 just below $2000.
I believe that what we are seeing right now is a period of consolidation as latecomers to the rally consider the merits of extreme bullish projections. Yet with the dollar and yields set for lower ground next year, the big picture remains positive for gold and silver as we look towards 2024.
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Mark Yaxley, CEO of Strategic Wealth Preservation (SWP), began his journey in precious metals with Kitco Metals in 2006. Co-founding SWP in 2014, he now guides individual and commercial clients towards their investment goals. Renowned for his 'Inside the Vault' YouTube series, Mark has helped millions gain insights into gold and silver bullion ownership.