Up 27% year-to-date! Gold breaks through $2600 to hit a new high, analysts warn: a pullback is imminent
Gold futures prices closed above $2600 per ounce for the first time, up 27% year-to-date. Analysts point out that the Fed rate cut has enhanced the attractiveness of gold, while geopolitical risks have also boosted safe-haven demand. Despite the rise in gold prices, analysts warn of a possible pullback due to less ETF inflows and a lack of active participation from Asian buyers. Profit expectations for gold miners are rising, with high-quality gold mining stocks expected to bring strong cash flow and shareholder returns
According to the Smart Finance app, the price of gold futures has hit a new high, closing above $2600 per ounce for the first time. The market generally believes that the Federal Reserve's significant 50 basis point rate cut has increased the attractiveness of interest-free gold.
An analyst from Deutsche Bank stated that expectations of further rate cuts in the coming months have kept the price of gold on the rise, "as long as these expectations persist, the price of gold should continue to rise."
Forex.com analyst Fawad Razaqzada mentioned, "Geopolitical risks such as ongoing conflicts in Gaza, Ukraine, and other regions will ensure that the safe-haven demand for gold is maintained."
Due to investors seeking to hedge the uncertainty caused by long-term conflicts in the Middle East and other regions, the price of this safe-haven asset rose by 27% in 2024, marking the largest annual increase since 2010.
However, analyst Daniel Ghali from TD Securities believes that this record-breaking uptrend may experience a pullback.
Ghali stated, "Clearly, there is still some buying activity as the Fed begins its easing cycle with a significant rate cut." However, "the source of this buying activity remains outside our view," as ETF inflows are relatively low and Asian buyers have yet to enter, all signs of "extreme positioning."
COMEX gold futures for the near month rose 1.2% on Friday, closing at a record level of $2619.90 per ounce. Silver futures for the near month rose 0.2% on Friday, closing at $31.176 per ounce, with both precious metals rising 1.5% this week.
An analyst from Berenberg Bank stated that as gold prices may remain at current levels, gold miners' profits in 2024 and 2025 may exceed market expectations.
Berenberg Bank mentioned that geopolitical conflicts and the dovish stance of the Federal Reserve continue to support gold prices, stating, "High-quality gold mining stocks will not only generate strong free cash flow but also increase shareholder returns."
The U.S. gold sector saw significant gains on Friday, with Paramount Gold Nevada (PZG.US) up over 16%, Osisko Development (ODV.US) up nearly 7%, U.S. Gold Corp (USAU.US) up over 6%, Harmony Gold (HMY.US) up over 4%, Gold Fields (GFI.US) up over 3%, and Newmont Mining (NEM.US) up nearly 2%