Talking Gold — November 2024
Gold Market Recap: Gold Continues to Climb, Defying Higher Rates
Gold’s sustained rally continues as the yellow metal recorded six new all-time highs in October, finishing the month up 2.5% and closing at $2,734/oz. Gold’s 41 new all-time highs this year rank second-most over the past 50 years, fast approaching 1979’s record of 58. This momentum has helped the spot price rise for nine consecutive months, producing a year-to-date gain of 32.65% — outperforming both stocks and bonds.1
A hotter-than-expected Core PCE print and a resilient labor market pushed the 10-year US Treasury bond yield to the highest level since July. Yet, despite the concurrent rise in yields and the dollar, gold continued to surge in October due to geopolitical uncertainties, election turbulence, and record total gold demand.2
Lower real rates from an expected 88 basis point (bps) of cuts between now and May 2025 is only one of the major macro factors underpinning gold’s bright outlook. Other tailwinds include heightened participation from ETF investors, greater expected fiscal deficits regardless of US government party control, unresolved geopolitical tensions and the potential for sustained central bank purchases.3
Gold Performance Drivers
Flows: Money managers remain bullish on gold, underscored by a sustained extension of long contracts and elevated ETF demand. Global gold ETF holdings increased by 0.9% in October, an estimated 23.62 metric tons (t) as year-to-date flows flipped to positive, at US$389m. This was the fifth consecutive month of inflows and the highest cumulative five-month average since April 2020. Long speculative positioning in COMEX gold futures ended October at 242,427 contracts, while also exhibiting the highest rolling six-month average since March 2020.4
Factors: Consolidation could be expected given that the 14-Day RSI traded near overbought levels toward the end of the month.5 But an extended RSI doesn’t mean a reversal is imminent, especially since other technical indicators, including moving average crossovers, reveal strength.
Fundamentals: Total gold demand (including over the counter (OTC) investment) gained 5% year-over-year (y/y) to 1,313t – a record for a third quarter. The value of demand jumped 35% y/y, exceeding US$100bn for the first time ever. Central bank buying remains on track for a strong year, while jewelry buying steps back amid high prices. Bar and coin investment are set to remain solid even as supply rises as producers push for a record year.6