October 22, 2024 – Gold prices touched another high record at $2,738.50 today, which has not only brought cheer but also expectations to investors and analysts. Sprott Asset Management's market strategies Paul Wong explains factors contributing to this; gold buying by central banks, more debt in the United States, and a potential peak in the US dollar this year.
Some problems that persist may have sparked concerns to the investors making gold seem like a good option for a safe-haven asset. The concerns include the increase of the U.S. debt-to-GDP ratio, debt, currency devaluation, and debt monetization. Moreover the potential tariff trade policies and uncertainties resulting from geopolitical tensions boost demand for the metal.
Several analysts have pointed out that central banks have also been awash in purchasing gold and this too has attributed to gold bullish run. Central bank net purchasing in the first semester of 2024 amounts to 483 tonnes, thus breaking the record realized in the first semester of 2023. Although there may be small changes in the long term, gold fundamentals remain bullish.
More analysts see gold to be in a bullish rally and expect more records coming in sights. Commonwealth Bank of Australia projected gold to reach at least $2,800 in this quarter and Citi echoed the same prediction. While others, like Paul Wong from Sprott Asset Management, have higher expectations for gold to reach $3,000 per troy ounce.
The latest release of Commitments of Traders (COT) report on Oct. 18 sees an increase in gold speculative net positions at 286.4K from 278.2K in previous week report. And the gold's non-commercial speculative long (buy) position is recorded at 70,024 contracts of 5,000 troy ounce gold per contract. While the short (sell) is only 15,992 contracts.
The COT is a weekly report from The Commodity Futures Trading Commission's (CFTC), a large net long position suggests that speculators are bullish on the gold outlook.
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