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Gold Hits Record High: Key Drivers of the Bullish Trend

By Samir Al Khoury,

Gold continues its upward trajectory, reaching a new record high of $2,521 today. This positive momentum shows no signs of slowing down, as the price of gold has risen by approximately 27% since hitting a low of $1,984 on 14 February 2024, culminating in today’s peak of $2,521. Given these developments, gold can be considered to be in a bull market.

Several key factors are likely to support this trend:

  • Geopolitical Tensions: Ongoing conflicts in the Middle East, the Red Sea, and the war between Russia and Ukraine are driving increased demand for gold as a safe haven.

  • Interest Rate Expectations: Anticipated cuts to US interest rates, with the first potentially occurring in September, are expected to provide further momentum to gold, an asset that does not generate yield. Lower interest rates enhance gold’s attractiveness.

  • Weakening US Dollar: The decline in the US dollar index, which tracks the dollar against a basket of six major currencies, alongside a drop in US Treasury bond yields across various maturities, also favours gold.

  • Global Economic Uncertainty: The likelihood of an economic recession in the United States—the world’s largest economy—in the coming period adds to the demand for gold.

In addition, gold remains an attractive hedge against inflation. The US core consumer price index (CPI) recorded an annual increase of 2.9% in July 2024, still above the Federal Reserve’s target rate of 2%.

Markets are closely watching the upcoming speech by US Federal Reserve Chairman Jerome Powell at the Jackson Hole symposium, seeking insights into the future path of interest rates. This event is expected to have a direct impact on various financial instruments, particularly gold.

 

Technical Outlook

From a technical perspective, several indicators suggest continued strength in gold prices:

  • Moving Averages: The 20, 50, and 200-day moving averages are aligned in an upward trend, with the 20-day average crossing above the 50-day average and the 50-day average surpassing the 200-day average.

  • Relative Strength Index (RSI): Currently at 66 points, the RSI indicates strong upward momentum for gold.

  • MACD Indicator: The MACD has crossed above the Signal Line and remains in positive territory, reinforcing the positive outlook for gold.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk.

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