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Gold price surges ahead on Tuesday, on track to close above July highs 

Gold futures rose on Tuesday, surpassing $2,000 per ounce and heading for their highest close since late July.

The precious metal received support from robust central bank buying and indications of easing U.S. inflation, which heightened expectations for a halt to the Federal Reserve's interest-rate hikes. 

Multiple analysts and banks have highlighted the supportive effect of central bank gold buying for the commodity’s price this month. In early November, German technology firm Heraeus said central banks, led by emerging market economies, added 800 tonnes of gold to their collective reserves — 14% more than last year.

Gold futures for December delivery rose by $26.70, or 1.3%, reaching $2,006.90 per ounce on Comex. Prices for the most-active contract have not concluded a session above $2,000 since October 30. A settlement around the current level would mark the highest since July 31, according to FactSet data.

Peter Spina, president of GoldSeek.com, explained the recent price dynamics to MarketWatch: 

“Gold is seeing a pattern of strong buying demand coming out of Asia with India importing significantly more gold in October than was forecasted last month. Combine that with rates coming off recent highs, hope for a Fed pivot and a weaker U.S. dollar last month, gold is positioned very well to make a significant move above $2,000 an ounce now and challenge record price highs.”

 

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FOMC minutes: Negative impact of Fedspeak should be limited, says Commerzbank

A gold price forecast outlined by Commerzbank analysts in a note on Tuesday said the yellow metal was unlikely to suffer significant setbacks following the publication of the Federal Open Markets’ Committee minutes: 

“Now that concerns about the conflict in the Middle East have abated noticeably, the US interest rate outlook has regained the upper hand for gold. Against this backdrop, the minutes of the latest FOMC meeting, which are due to be published today, are likely to be of interest.

The fact that for many FOMC members, another rate hike is not yet off the table could be reflected again in the minutes. That said, there have been increasing indications since the meeting in early

November that the Fed has probably reached its interest rate peak. After all, besides weak economic indicators, inflation also fell more steeply than expected in October.

Any negative impact of the minutes on prices should therefore be limited.”

 

Gold price forecast: “Tactical downside” possible for XAU/USD 

A recent gold price forecast from ANZ Bank said it expected gold to trade in the $1,930-$2,000 range in the near term. If the commodity maintains within those boundaries, “the bullish trend will remain intact,” ANZ’s analysts wrote last week. 

Analysts at TD Securities, however, saw room for “tactical downside” for the price of gold: 

“More than a month has passed since the war in the Middle East catalyzed a massive short squeeze in precious metals markets. Crude oil markets have melted, erasing the risk premium associated with the war, and yet precious metals prices have remained resilient (it was a bear trap!) in defiance of the traditional playbook pointing to a fading risk premium. Finally, it is time to come to the dark side.

We now see risks that buying exhaustion could soon morph into selling activity. Zooming out, however, macro headwinds may increasingly work against discretionary bears in gold, but the door is open for some tactical downside.”

At the time of writing, the December 2023 gold futures contract on the NYMEX traded around the $2,003 mark, as per MarketWatch data.

The price of gold remains close to 9.5% up year-to-date as of November 21.

When considering gold and other commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.

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