Gold may not reach a price ceiling anytime soon. Here’s why.
2024-10-18 12:57:00
The rally in gold showed little sign of a slowdown on Thursday, even as futures prices for the precious metal touched their highest intraday level on record — for the 33rd time so far this year.
Gold isn’t likely reach a price ceiling anytime soon, said Michael Armbruster, co-founder and managing partner at Altavest. “The trend is up and the key drivers for gold are unchanged — out-of-control federal spending which ultimately forces the [Federal Reserve] to debase the U.S. dollar,” he told MarketWatch.
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“Foreign demand remains strong, and we are likely to hear more from the BRICS bloc regarding their de-dollarization plans,” Armbruster said, referring to Brazil, Russia, India, China and South Africa. “Western investors have been slow to embrace gold, and if that changes, it could turbocharge gold higher.”
On Thursday, gold for December delivery GC00 GCZ24 rose $16.20, or 0.6%, to settle at $2,707.50 an ounce on Comex, after tapping a high of $2,712.70. Based on the most active contract, gold futures marked all-time settlement and intraday highs.
So far this year, gold based on the most-active contract has hit 33 intraday record highs — the most in a calendar year since 2011, when there were 38 record highs, according to Dow Jones Market Data.
Gold is “climbing against all paper currencies, not just the U.S. dollar,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management.
The precious metal saw support Thursday, in particular, from the European Central Bank rate cut, “which reminds everyone that most of the major central banks have gone into easing mode, not just the Fed,” he said.
The ECB reduced its key interest rate by another 25 basis points, to 3.25%. The rate cut “contributes to the belief that most central banks are on a protracted easing path,” said Peter Grant, vice president and senior metals strategist at Zaner Metals, adding that lower interest rates are supportive to gold.
Meanwhile, U.S. economic data released Thursday were somewhat mixed. Better-than-expected retail sales and the Philly Fed’s factory gauge were offset to some degree by weaker-than-expected industrial production, Grant told MarketWatch. Gold prices dipped shortly after retail-sales data showed an increase of 0.4% in September, then moved up in the wake of a September drop of 0.3% in industrial production.
The uptrend for gold “looks strong, and I believe we could rally into year-end,” Grant said. “I continue to be impressed by gold’s resilience in the face of recent dollar gains.”
