Gold Market Movements: Insights from 18th–22nd November 2024

Weekly Overview of Gold Prices

The gold market experienced significant fluctuations over the past week, reflecting the impact of global economic and political events. Spot gold prices began the week cautiously, with notable influences from geopolitical tensions and macroeconomic shifts. On 18th November, gold traded near $2,561 per ounce, marking a slight decline from the previous session. By 22nd November, it rebounded, reaching $2,715 per ounce, up approximately 1.75% week-on-week.

The resurgence in gold prices stemmed from its traditional appeal as a hedge against uncertainty. Key factors influencing this upward movement included Middle Eastern geopolitical turmoil, fluctuating U.S. Treasury yields, and evolving Federal Reserve policies.

Political and Economic Influences on Gold Prices

1. Geopolitical Unrest

Geopolitical tensions in the Middle East significantly supported gold prices this week. Renewed clashes in Israel and Gaza heightened global concerns, increasing demand for safe-haven assets like gold. Simultaneously, ongoing sanctions and trade disruptions involving major economies intensified market volatility, pushing investors towards the stability of gold.

2. Central Bank Policies

The U.S. Federal Reserve’s mixed signals on interest rate strategies added another layer of complexity. Despite previous hawkish rhetoric, the Fed hinted at a possible pause in rate hikes due to slowing inflation. Lower interest rates typically decrease the opportunity cost of holding non-yielding assets like gold, encouraging demand.

3. Dollar Strength

The U.S. dollar index (DXY) saw a modest increase, reaching 107.5 by the week’s end. While a stronger dollar usually pressures gold, this week’s geopolitical backdrop overshadowed the currency’s gains, allowing gold to maintain its upward trajectory.

Key Trends in Stock and Commodity Markets

The gold market’s movements also influenced broader financial markets:

• Mining Stocks: Major gold miners, including Barrick Gold and Newmont Corporation, recorded gains of 2–3% by the week’s end. This reflects optimism surrounding rising gold prices.
• Commodities: Other precious metals like silver followed gold’s trend, gaining nearly 2% over the week. The broader commodity market saw oil prices rise modestly, further fuelling inflationary concerns.
• Equity Indices: Global indices, such as the FTSE 100 and S&P 500, exhibited mixed performances, influenced by sector-specific dynamics. The energy sector outperformed, while tech stocks underperformed due to concerns about tightening liquidity.

Key Technical Levels

For traders, this week highlighted critical support and resistance levels for gold:

• Support: $2,533 per ounce acted as a key support level, underpinned by the 100-day simple moving average.
• Resistance: Gold faced resistance near $2,715, which will serve as a critical level to monitor in the coming week.

Challenges and Opportunities

The ongoing volatility presents both risks and opportunities for traders:

• Challenges: Rising U.S. Treasury yields remain a headwind for gold. Additionally, stabilisation in the dollar could cap gains.
• Opportunities: Oversold conditions, as indicated by the Relative Strength Index (RSI), suggest potential for further price recovery.

Summary

This week highlighted gold’s enduring appeal amid uncertainty. Key drivers included geopolitical tensions, evolving Federal Reserve policies, and investor sentiment towards safe-haven assets. Spot gold’s rebound to $2,715 per ounce signals resilience, even in the face of headwinds like rising yields and dollar strength. Looking ahead, traders should monitor developments in the Middle East, U.S. economic data, and central bank communications to anticipate future market moves.

By understanding the underlying drivers of gold’s performance, traders can better position themselves in this dynamic environment.

See what happened in the gold market last week here.