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Gold Soars to Record Highs: Is a Bull Market on the Horizon?

INVESTINGGold Soars to Record Highs: Is a Bull Market on the Horizon?
The gold market deserves special attention this week. Setting a historical record for metal is not so frequent, although the last two “spikes” occurred at an interval of just three months. The current record is 2180 USD and 1991.5 euro. In this context, the market is primarily indicating growing hopes of a Fed rate cut. Investors are becoming more confident in the June timeframe, and Powell’s Congressional presentation has confirmed a high likelihood of this scenario.

At the end of the week, gold is up after the NFP report, which turned out to be weaker, although the change in farm sector employment exceeded expectations. It’s worth noting the strong revision down of the previous month’s result along with an unemployment rate increase above forecasts. The Fed will also be taking falling wages into consideration.

This recent significant gold price increase is likely a result of speculative investors increasing their long positions. This will be confirmed by the latest data, which will be published next Tuesday by the CFTC. In the ETF market, which replicates physical gold, there has been a dominant capital outflow lately, and so far, there is no improvement. If this market is reactivated again, it could be an additional growth impulse for gold in the coming months.

The upcoming week mainly boils down to one key publication, which will be the US inflation data released on Tuesday. PPI data will not electrify the market as much but could cause some increased volatility. The strength of the American consumer will also be evaluated through the retail sales report. From domestic data, we will receive the CPI indicator (Friday) and the latest NBP inflation report (Monday).

Łukasz Zembik Oanda TMS Brokers

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