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Gold market: Analysts raise forecasts amid price fluctuations and economic factors

gold analysis, forex trading

On Tuesday, March 12, 2024, the gold market witnessed a significant event as the price of gold recoiled from its peak, falling below $2170 per ounce. This movement marks a notable departure from its recently achieved all-time high. Despite this pullback, analysts are optimistic. They have revised and elevated their projections for the future value of gold.

Their rationale is rooted in the belief that the current downtrend in the gold market is a temporary phase characterized by profit-taking and price adjustments. They anticipate that once this phase concludes, the price of gold is likely to experience a substantial upsurge, potentially reaching or surpassing the $2300 mark.

Analyzing the trend from February 14 to March 10, 2024, there's a clear observation of an upward trajectory in the XAU/USD exchange rate, with an increase of over 10%. This rise is significant as it represents the most substantial growth momentum since November 2023. According to market analysts, this trend isn't just a fleeting surge but indicates a deeper, more sustained bull market in the gold sector.

This suggests that the rising trend in gold prices might continue beyond the current period, driven by underlying market dynamics and investor sentiment.

When zooming out for a more comprehensive view, it's evident that since the low point in October 2022, gold prices have escalated impressively, recording an increase of over 30%. This rise has been consistent and significant, shaping the market's landscape.

The recent correction, following the setting of a new historical high, is perceived not as a worrisome downturn but as a normal and healthy market phenomenon.

This pattern of rise and correction is typical in trading markets, where periods of rapid growth often lead to profit-taking and slight pullbacks, paving the way for potential future gains.

Given these market dynamics, financial experts across the board are adjusting their outlooks for gold positively. Their consensus is not just a short-term reaction but a calculated prediction that within the current half-year, the price of gold might surge to about $2300 per ounce.

This projection is based on a comprehensive analysis of market trends, investor behavior, and economic indicators. The experts' unanimous agreement on this forecast underlines their strong conviction in the resilience and growth potential of the gold market.

Delving into investor strategies, there's a noted trend of accumulating gold in anticipation of the upcoming interest rate cuts in the USA. This strategic accumulation is indicative of investor confidence in gold as a stable investment amid fluctuating market conditions.

However, there's an observed slowdown in extreme buying activities, which experts believe is affecting the current gold prices, hinting at an impending market correction. Despite this, the overall outlook remains positive.

The USB experts highlight that gold prices are likely to continue their ascent, albeit now more influenced by macroeconomic factors and market turning points, suggesting a more nuanced and complex market behavior in the near future.

The recent surge in gold prices can be dissected into two primary components: technical and fundamental factors, and market sentiment. The latter, driven by emotions, has played a significant role, especially as prices rapidly surpassed critical resistance levels.

Economists from TD Securities believe that this emotional aspect might lead to a temporary retreat in gold prices shortly. However, this does not negate the potential for further gains in the ensuing months.

The anticipation of the Federal Reserve (Fed) lowering interest rates plays a key role in this assessment. Gold purchases by central banks and investors, coupled with escalating geopolitical risks, are expected to provide additional support to the gold market, maintaining its upward trajectory.

gold analysis, forex trading
XAU/USD daily chart, MetaTrader, 12.03.2024



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