Gold rally stuns the markets amid overbought concerns
Gold rally stuns the markets amid overbought concerns
Gold prices continued with an impressive rally in Thursday's trading sessions as it extended gains above $2,685 per ounce, the last record high last seen on September 26. The yellow metal is now up more than 30% for the year, approaching $2,700 per ounce.
It is important to note that while central banks have been aggressively accumulating gold throughout the year, influencing much of the price volatility, investors demand was somewhat muted. Notable financial analysts are now shifting their stance and expressing confidence in the yellow metal.
Robert Armstrong, a Financial Analyst at the Financial Times, acknowledged gold's appeal during this market environment. Speaking at the 2024 London Bullion Market Association Precious Metals Conference, Armstrong revealed, 'I see value in gold—it’s a complicated trade, but I think it’s time to buy a little.' His view stems from the belief that in times of uncertainty and market turbulence, gold tends to outperform."
Fundamentals support gold extended rally, but caution is urged
"Gold's remarkable performance in 2024 is underpinned by strong fundamentals, with economic and geopolitical uncertainty remaining high. While the metal's surge excites traders and investors, there are technical indicators suggesting caution.
Gold Relative Strength Index (RSI) shows the market may be overbought, but the 14-day Simple Moving Average (SMA) and the bullish RSI crossover suggest there's room for further gains, potentially pushing prices to new record highs.
There are also signs that investors are beginning to accumulate gold as a liquidity play and a hedge against potential market downturns. However, Armstrong advises buying on dips rather than chasing the current rally, cautioning that holding gold for extended periods is key to benefiting from any short-term pullbacks.
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