Gold Surges Despite Strong Dollar and Rising Bond Yields, Eyes $3,000 Target by Year-End
The past 10 days have seen gold prices surge nearly 4%, pushing its year-to-date gain to an impressive 32%. This bullish momentum is remarkable, given the backdrop of a stronger dollar and increasing U.S. bond yields—factors that typically work against gold buyers. The recent uptrend can be attributed to widespread uncertainty stemming from the situation in the Middle East and the upcoming U.S. presidential election.
Although yesterday’s session ended with a decline of over 1%, potentially signaling a correction due to profit-taking, there is still optimism in the market. A deeper pullback may not be surprising, with potential support around the $2,600 per ounce mark. However, dip-buyers have stepped in after the recent correction, sparking a strong recovery and setting their sights on a $3,000 target by the end of the year.
Impact of the U.S. Election on Fed Policy
The upcoming U.S. presidential election on November 5 comes just before the Federal Reserve’s next meeting. While the election result is unlikely to affect the anticipated 25 basis point cut, the newly elected president could influence the Fed’s long-term strategies. Donald Trump’s proposed tariff policy may lead to a more restrictive Fed stance, while a victory for Kamala Harris could continue the current interest rate cut trajectory.
Recent polls showing Trump gaining ground on his opponent have drawn market attention, leading to a rise in the U.S. dollar—a development that may dampen the enthusiasm of gold bulls.
Gold Price Forecast: $3,000 Likely in 2024?
Gold’s recent rally saw prices reach around $2,750, but a sharp pullback has raised concerns about further declines. Traders are now eyeing the $2,700 threshold, with a drop below that level potentially confirming a downward trend and prompting a reassessment of trading positions.
If a deeper correction occurs, traders may consider the $2,620 to $2,600 range as an entry point to capitalize on the upward trend at a better price. The key medium-term target for buyers remains the psychological $3,000 level, which could become more attainable if the Fed signals additional rate cuts later this year.
OceanaGold Corp: A Promising Investment Opportunity
Shifting focus to a gold mining company with significant upside potential, OceanaGold Corporation (OTC:) operates mining and exploration projects in various regions, including the U.S. and the Philippines. The company reported a profit in the second quarter of this year for the first time since June 2023, indicating a positive trend that could lead to a sustained bullish rally. According to InvestingPro, OceanaGold offers over 36% upside potential, making it an attractive investment option.
Remember, all investments come with risks, and it’s essential to evaluate assets carefully before making any decisions. This article is for informational purposes only and does not constitute investment advice.