Gold market comment

17 Ekim 2024

Today’s market analysis on behalf of Dilin Wu Research Strategist at Pepperstone

Gold bulls are gaining strength, with prices hitting all-time highs in most G10 currencies and hovering just below historical peaks against the USD. This surge reflects real demand for gold rather than just currency dynamics. I believe the $2,700 level is well within reach before the end of October.

Uncertainty surrounding the U.S. economic outlook continues to drive up gold prices. With initial jobless claims exceeding expectations and Fed Governor Waller warning that hurricanes and strikes could reduce October’s nonfarm payrolls by up to 100,000, the risk of missteps in future Fed rate hikes has increased. Coupled with a massive $1.8 trillion U.S. deficit, these factors have intensified concerns over the economic trajectory, pushing investors toward gold as a safe haven amid rising volatility and unclear monetary policy.

In the absence of significant geopolitical developments, three factors will be pivotal for gold’s trajectory. First is U.S. retail sales and the upcoming speeches from Fed officials. If retail sales fall short of the expected 0.3% month-over-month increase, perhaps to 0%, and the Fed’s stance on rate cuts remains ambiguous, this could provide a further boost for gold bulls.

Second is the pricing of the U.S. election. With Trump’s rising odds, the “Trump trade” favoring a stronger dollar could weigh on gold, with support anticipated around $2,660.

Finally, China’s economic outlook plays a significant role. Market confidence in China’s stimulus measures has been lukewarm, but if the upcoming NPC Standing Committee provides clearer details on fiscal stimulus or consumption-boosting measures, I believe gold could push towards $2,700.
Zaid Barem / YMM