Gold Is Doomed To Retest Fresh All-Time Highs
A short wave of U.S. Dollar's strengthening continues since the beginning of December, yet it would be close to its end, in my opinion, as fundamental reasons for declining Treasuries’ yields are still here. The annual return from 10-year public debt papers has already slipped by almost a full percentage point, from a peak of 5.02% in late October to 4.0990% today. That would more than cover current bets on any potential interest rate cuts by the Federal Reserve in 2024, especially since it is unknown, in what format it will take place, and whether it will take place at all. So, non-Dollars may turn around to rise again at any moment, without waiting for a concrete drivers like U.S. Nonfarm Payrolls this Friday or consumer inflation release on December 12. EURUSD went down from 1.10 to below 1.07, which could be considered oversold enough to start bouncing. Even in case of lowered price pressure indicators, Gold spot and futures have a high chance of getting back into a retest move to fresh all-time highs, which have been set well above $2100 per troy ounce at the opening of this trading week. XAUUSD dug into the lower range of $2,015-2,035, bouncing off the bottom of this $2,000+ area as gold buyers are getting used to the new scale of price values. It seems it is only a matter of time before their minds become mature to make the golden lawn growing higher to form buds and flowers to bloom. Physical bullion and e-Gold are usually a good rival to foreign exchange reserves when monetary policy suggests a dovish reversal and the economy slows down, especially if the stock market rally would be rather limited. Gold transactions are also required to hedge newly accumulated positions in stocks in the broad market. Buying gold moderately above $2,000 is a better choice than doing the same trick above $2,100 or higher, IMHO.
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