Gold to Resume Steady Climbing

Gold prices have risen by 1.0% to $2,683 per troy ounce this week, retreating slightly from their new all-time high of $2,685.7 per ounce. This level surpasses the previous record of $2,685.5 per ounce set on 26th September. Despite the brief pullback, gold is poised to resume its upward climb.

Last week, the bullion faced some challenges. Gold prices initially dropped by 1.9% to $2,602 after the release of the FOMC minutes and higher-than-expected inflation figures in the United States, which reinforced expectations of a flat trajectory for future Federal Reserve (Fed) interest rate cuts. The U.S. Dollar strengthened in response, causing gold to retreat to a key support zone at $2,600–$2,640.

However, geopolitical tensions soon came into focus, with speculation surrounding an Israeli retaliation strike on Iran’s nuclear and oil infrastructure. This helped gold recover by 0.2%, rising to $2,657 per ounce. Although Iran signalled that a limited Israeli response would not lead to further escalation, and Israel indicated a more restrained approach, gold prices continued to climb instead of falling. This indicates underlying bullish momentum in the gold market.

Investor sentiment is also supportive of gold’s rise. The SPDR Gold Trust (GLD) saw net inflows of $145.7 million last week, with a significant $563.6 million in the first few days of this week alone—marking the largest inflow since early September. This shows that investors are either confident in the geopolitical situation remaining contained or are anticipating more aggressive Fed rate cuts, further bolstering gold’s appeal. The U.S. Dollar, which typically strengthens during geopolitical instability, has remained weak, another indicator of market sentiment favouring gold.

This week, U.S. retail sales data is expected to show an increase of 0.3% MoM, which could influence both the Dollar and gold. Additionally, PMI indices will be released next week, which could shape expectations regarding future Fed policy. For a weakening Dollar, the data needs to underperform, or dovish signals from Fed officials should emerge.

Technically, gold prices are likely to continue climbing into mid-December. A sustained rise above $2,680 per ounce could open the door for further gains, with the next targets at $2,710–$2,730 per ounce, and the possibility of reaching as high as $2,900 per ounce.