In a significant surge, gold prices breached the $2,000 per ounce mark on Monday afternoon, maintaining a rally ignited by its initial breakthrough since May. The precious metal, renowned for its status as a safe haven in turbulent times, has seen a remarkable uptick, propelled by the ongoing Israel-Hamas conflict in the Middle East and the highly anticipated Federal Reserve meeting scheduled for this week.
Michele Schneider, Partner and Director of Trading Education and Research at MarketGauge.com, expressed optimism about gold’s trajectory this year, stating, “I started out this year thinking that gold could go to $3,000 an ounce. I still think it’s very possible. Especially given everything that’s going on.” Schneider noted that gold has demonstrated resilience “in the face of a stable dollar and higher rates.” Typically, a robust dollar exerts downward pressure on precious metal prices, which are denominated in US dollars. The US dollar index (DX-Y.NYB) has surged approximately 6% since early July.
In a higher interest rate environment, investors are enticed by the prospect of attractive returns from placing their funds in US Treasuries rather than gold. Market consensus anticipates the Federal Reserve will maintain current rates during its forthcoming meeting, while persisting on its course of “higher for longer.” Despite some strategists advising caution against hasty investments in the precious metal at present, Schneider of MarketGauge believes that if prices breach the breakout threshold of $2,050, momentum may favor investors in the short term. However, she also cautioned, “Investors should know when to get in and out of the trade though.”
Schneider emphasized the trend in gold’s behavior, noting, “What we’ve seen in gold, and I think this is very important — it’s been a Buy when it looks terrible and it’s been a Sell when it looks amazing. Which means if it continues to go up and buyers come in at the top, then you know it’s going parabolic.”
The ascent of gold prices to levels surpassing $2,000 per ounce underscores its enduring appeal as a safe haven asset, even in periods of robustness in the US dollar and rising interest rates, which may make alternative investments more enticing. Nevertheless, investors must exercise prudence in timing their entry into the market, as acquiring assets at their zenith can lead to overextended investments when the rally eventually subsides, resulting in a reversion to lower price levels.
Source: Yahoo Finance
