Gold Nears $2,200/oz

(March 11,2024-Ewa Manthey & Warren Patterson )

Gold surges to fresh record highs

Gold prices jumped on Friday to trade just below $2,200/oz before giving back some of the gains this morning. Gold rallied almost 5% last week, setting a nominal high on four consecutive sessions. The release of a higher-than-expected jobless rate in the US last week increased expectations that the Fed might be moving closer to looser monetary policy. The US data pushed the dollar and 10-year Treasury yields lower, boosting the precious metal further. Rising gold prices pushed the net speculative bullish bets for gold to the highest level in two months.

The latest CFTC data shows that speculators increased their net longs in COMEX gold by 63,018 (the biggest weekly addition since 4 June 2019) for a third consecutive week, leaving them with a net long of 131,060 lots as of last Tuesday, the highest bullish bets since the week ending 2 January 2024. We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with ongoing wars and the upcoming US election. We have revised our 2024 gold forecast higher, and we now expect fourth quarter prices to average $2,150/oz. We expect an average of $2,084/oz in 2024 on the assumption that the Fed starts cutting rates in June and the dollar weakens. The market now awaits US inflation data due for release on Tuesday for further clues on the US monetary policy. A stronger-than-expected reading would cap further gains in the precious metal.