What has been driving gold prices to record highs?
Important Headlines To Monitor
- US CPI – 10th October 13:30 GMT
- US PPI – 11th October 13:30 GMT
- US Jobless claims – 10th October 13:30 GMT
- Geopolitics tension
- Central Bank demands
Gold has seen around a 28% increase this year, the biggest annual gain in 14 years.
What has been causing this surge in gold prices?
The main reasons behind the surge of gold in 2024 has been to a number of key factors which are:
- Federal Reserve interest rate cuts
- Demand from central banks
- Geopolitical tensions
This week, we’ve seen gold receiving downward pressure and hitting the low range of $2605 as of Tuesday 8th October.
The downward supporting pressure on gold in the current climate is being helped with strong labour market data coming from the united states, this in return is pushing back the federal reserve aggressive 50bps rate cut in November.
The CME FED watch tool is now showing a 0% for 425-450, 87.3% of 25bps and only 12.7% for 50bps
- 0% – 425 – 450
- 87.3% – 450 – 475
- 12.7% – 475 – 500
China has also been reducing the buy demand for the metal which in return is supporting downward pressure on gold.
We have US inflation data on Thursday and Friday which is CPI and PPI, along with the weekly jobless claims data.
Depending upon the data prints this week, and middle east tensions we could be seeing gold head under $2600 levels for the first time since 20th September.
bigger picture
- US Rate cuts support gold upside
- Middle east tensions support gold upside
- Central banks divergence supports gold upside
