Gold’s behaviour points to sustained strong demand

Do note that this group of traders tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness. They are likely to have tight stops and no underlying exposure that is being hedged, and this makes them most reactive to changes in the fundamental or technical developments. In the short term, gold needs to hold key support levels in order to avoid a fresh round of profit taking, but so far the corrections seen have been shallow enough to prevent temporary price weakness through long liquidation. 

After hitting a fresh record high last week, gold suffered another mild round of consolidation, however without challenging support at USD 2,146 followed by USD 2,132. Moves that happen for no apparent reasons are often ones that deserve some respect, and today’s rally back towards USD 2,200 is one of them, happening without any notably support from other markets, highlighting a continued strong buying on dip mentality in the market. We maintain our 2024 forecast for gold to reach USD 2,300, and silver USD 28, with the technical picture pointing even higher towards USD 2,500.