Gold Update: Is Half Enough?

Since my last major update in November, the gold futures price has increased by almost 12%. At that time, most readers had chosen the bullish target of $2,089, where the price would retest the all-time high.

The gold futures chart is due for an update as it has reached a significant point in the current retracement following its recent peak at $1,975.

Gold Futures Daily

Source: TradingView

The gold futures price had been steadily rising for three months from the start of November until the beginning of February, where it reached a top of $1,975.

However, the market was hit when the “Jobs Report Dropped A Bombshell On The Markets”, which caused a significant drop in the value of many assets, including gold.

The recent price action in gold futures has been notable, marked by a sudden drop of $100 at the beginning followed by a slower decline in pace as the price retraced almost 50% and hit $1,811 by the end of February.

The question is whether this loss of half of the preceding rally is enough to consider the current bounce as a reversal. Continue reading "Gold Update: Is Half Enough?"

Can Central Banks See What We Don't?

The gold futures have skyrocketed on better than expected U.S. inflation data last week. The annual inflation rate in the U.S. slowed for a fourth month to 7.7% in October, the lowest reading since the start of a year, and well below forecasts of 8%.

US Annual Inflation & M2


According to logic, the gold price should fall as anti-inflationary tightening measures have shown positive results in cooling price growth. The printing press, represented by the M2 money supply indicator (black dotted) in the chart above, has stopped and the reading is declining as well.

Let us check the chart below to look for an answer in the fundamental data of world gold demand.

WGC Gold Demand

Courtesy of World Gold Council

The graph above shows the quarterly data of demand statistics in the period from Q3 2021 to Q3 2022. According to the data, the most stable demand source comes from a technology side (wine-colored). The jewelry demand (dark purple) is price sensitive: it shrinks on the rising price and expands during price falls. The investment demand (dark green) is cooling down amid the tightening as per the logic I explained above. Continue reading "Can Central Banks See What We Don't?"