Gold prices have exhibited notable volatility in early December 2024, influenced by various economic indicators and geopolitical developments.
Technical Analysis
As of December 7, 2024, gold is trading at approximately $2,639.61 per ounce, reflecting a 27.67% increase since the beginning of the year.
The market has experienced fluctuations, with a peak of $2,800 in October and subsequent declines influenced by factors such as a stronger U.S. dollar and profit-taking activities.
Macroeconomic Indicators
The U.S. labor market has shown resilience, with non-farm payrolls increasing by 200,000 jobs in November, up from 12,000 in October.
Federal Reserve Chair Jerome Powell has indicated that the robust economic performance may lead to a cautious approach regarding further interest rate cuts. Market expectations currently suggest a 70.1% probability of a 25 basis-point cut in the upcoming Fed meeting.
Geopolitical Developments
China’s central bank resumed gold purchases in November after a six-month hiatus, increasing holdings from 72.80 million to 72.96 million fine troy ounces.
Additionally, the proposed acquisition of De Grey Mining by Northern Star Resources for $3.2 billion highlights ongoing consolidation in the gold mining sector.
Market Sentiment
Investor sentiment towards gold has been mixed. In India, physical gold was sold at a discount due to a depreciating rupee and subdued demand, despite the wedding season.
Conversely, in China, seasonal factors have led to softer demand, with dealers offering discounts amid sufficient supply.
Holistic Forecast
Considering the interplay of technical trends, macroeconomic indicators, and geopolitical factors, gold prices are expected to remain range-bound in the near term. The anticipation of U.S. interest rate cuts may provide support, while a strong dollar and profit-taking could exert downward pressure. Ongoing central bank purchases and sector consolidation are likely to offer additional support to gold prices.
