Gold prices may continue to rise this week
The gold market may continue to move higher as the US Federal Reserve (Fed) returns to large-scale Treasury purchases, according to analysts.
At the close of trading last weekend, spot gold reached $4,298 an ounce, up about $100 over the week. The market advanced after the US Federal Reserve (Fed) cut interest rates by 0.25 percentage point to 3.5-3.75%.
This week, according to Kitco's latest survey, of 13 analysts, only two believe gold is likely to move sideways. The rest, equivalent to 85% of experts, forecast that the precious metal will continue to rise.
An online poll of 237 retail investors also showed that 71% of respondents expect gold prices to perform positively. Meanwhile, 11% of investors were bearish, while the remainder held a neutral view.
One-kilogram gold bars at the Argor-Heraeus gold refinery in Mendrisio, Switzerland. Photo: Reuters
"Gold prices will rise this week," said Adrian Day, president of Adrian Day Asset Management. In his view, the US Federal Reserve's (Fed) return to large-scale Treasury purchases is a positive factor for gold.
Starting on Dec. 12, the Fed will spend about $40 billion a month to buy Treasury bonds. The move could reduce pressure for borrowing costs to rise in the US overnight repo market (short-term lending).
Sharing that view, James Stanley, senior market strategist at Forex.com, said gold has broken out of a bull pennant pattern (a short-term upward price pattern). The only remaining resistance is the previous all-time high (ATH), so this expert believes there is no reason to be bearish at this point.
"I think gold is in a favorable position to continue rising through 2026, and I remain bullish until there is evidence that inflation could cause the Fed to back away," James Stanley said.
Marc Chandler, managing director at Bannockburn Global Forex, analyzed that the Fed's purchases of Treasury bills may have encouraged fresh buying more than the rate cut did. He also expects the Bank of Japan to raise interest rates and the Bank of England to cut rates this week.
However, he said the market has already absorbed a great deal of information, and a period of consolidation, a correction in the US dollar, along with US bond yields remaining high, could cause gold prices to stall near the recent peak around $4,380.
Alex Kuptsikevich, senior market analyst at FxPro, forecast that gold prices will continue to rise this week, but the uptrend is nearing its end.
The analyst cited the Bank for International Settlements (BIS) as saying that, for the first time in 50 years, gold and US stock indexes have risen at the same time. "This rally is speculative and shows signs of a bubble," Kuptsikevich said.
He further analyzed that this week may begin with a rapid price surge driven by short sellers in gold and other metals, but he will closely watch subsequent developments. Gold is overheated and nearing the end point of the bull market, according to the senior market analyst at FxPro.
