Gold continues to show strength just below $2,200. ANZ Bank economists say volatility in gold will increase as the US elections approach. Additionally, economists predict that higher prices will reduce physical purchases this year. Market analyst Dhwani Mehta, on the other hand, looks at critical levels in the short-term picture.
ANZ: This will support gold prices!
ANZ Bank economists analyze the outlook for gold amid geopolitical uncertainties and equity market highs. Economists share the following assessment:
Change of the ruling party in the USA will create risks regarding the future of policies. Amid these economic and geopolitical tensions, stock markets are reaching record highs. This may make investors more cautious about downside risks rather than upside potential. Volatility is expected to increase as we get closer to the US elections. The risk-off scenario in stock markets will support gold prices.
ANZ: Higher prices will likely reduce physical purchases this year!
Physical gold demand has shown strong resistance to higher prices since 2021. But ANZ Bank economists say further growth in physical demand will be limited. Economists state that gold demand is still strong in China. They note that imports in January doubled compared to the previous month and reached 153 tons. In this context, economists make the following comment:
This suggests that the motivation behind investing in gold may alleviate affordability problems caused by the sharp rise in gold prices. This could keep demand steady, but a significant increase seems unlikely. Although India’s gold consumption will decline marginally in 2023, it remained close to 750 tons on average before the epidemic. Structural gold demand appears strong due to an increasingly wealthy population. However, the recent price rise may put pressure on physical purchases. We estimate that gold consumption will remain constant at 750 tons in 2024.
Gold price technical analysis: $2,251 is the target!
Market analyst Dhwani Mehta looks at the technical picture of gold. Gold price turned south after rejection at $2,200. The short-term technical outlook for the shiny metal price remains constructive. Every decline is seen as a good buying opportunity for traders. With a Bull Flag in play, the gold price is on track to test the measured target at $2,251 if the uptrend regains momentum. Before this level, gold needs to constantly recapture the $2,200 threshold. The record level of $2,223 will be on the buyers’ radar.
The 14-day Relative Strength Index (RSI) is bearish when it is in positive territory. It also shows that ‘buy the dip’ continues for the gold price. Alternatively, the nearest support lies at $2,157, Friday’s low. Below this, it will retest the psychological $2,050 level. Further down, the $2,147 support will be a tough nut to crack for precious metals sellers. This level is a combination of the Bullish Flag resistance at $2,151, the 21-day Simple Moving Average (SMA) uptrend, and the previous week’s lower range.
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