Gold prices shine on: Traders stay bullish amid recent slump

The trading community’s optimism for gold prices remains undeterred despite a recent slump, attributing potential strength to a possible end to US Federal Reserve interest rate increases and the escalating conflict in the Middle East.

On Friday morning, spot gold prices oscillated between US$1,978 and US$1,978 per ounce, marking an increase of US$3.02 or 0.15%. Concurrently, domestic gold bars traded between 33,850 and 33,900 baht, as per Hua Seng Heng’s report.

The gold price trajectory is influenced by several factors, including the mounting anticipation of a halt in the Fed’s interest rate hikes. This could lead to a weakened dollar and US bond yields, following the central bank’s decision to maintain the rate at a 22-year peak of 5.25-5.50% last week.

Investors are also closely observing Hezbollah leaders’ stance on the Israeli conflict, which was announced late on Friday. According to Hua Seng Heng’s projection, gold prices could hit a resistance level of US$2,000 per ounce and find support at US$1,970.

YLG Bullion and Futures predict that gold prices will continue to move “sideways up” amidst recent profit-taking sales. This follows Fed chair Jerome Powell’s statement suggesting the nearing end of interest rate hikes, which incidentally increase the opportunity cost of holding gold. The next resistance level, as per YLG’s research, is between US$1,991 and US$2,003 per ounce.

Another factor bolstering gold prices is the buying spree by central banks. A World Gold Council (WGC) report earlier this week revealed that global central banks have been buying gold at an accelerated rate in this year’s third quarter, marking an 8% increase over the five-year average.

Gold trends

The past quarter witnessed the strongest net purchases of gold by central banks, skyrocketing to 337 tonnes. The full-year demand from central banks amounted to 800 tonnes, with the WGC expecting this trend to continue for the remainder of the year, said Shaokai Fan, head of Asia-Pacific (excluding China) at the WGC.

“The uncertainty of the global situation, especially the war in the Middle East, is causing central banks to accumulate more gold.”

Fan further added that future gold price trends would be contingent on the Fed’s policy and the ongoing Middle East conflict, which had previously driven gold prices beyond US$2,000 per ounce on October 30.

Meanwhile, the demand for gold in Thailand increased by 7% to 13 tonnes in the third quarter, compared to 12 tonnes the previous year. This surge was primarily driven by the demand for gold bars and coins, which rose 10% to 10.5 tonnes from 9.6 tonnes year-on-year.

Gold jewellery demand, however, slipped by 2% to 2.5 tonnes from 2.54 tonnes the previous year, partly due to price volatility, reported Bangkok Post.

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