Gold prices experienced strong volatility at the end of last week. A sharp drawdown on Thursday was followed by a quick recovery on Friday. The attempted correction didn’t continue, reflecting the persistently high demand for the yellow metal from investors. For a new wave of growth, the bulls need to regain control of the 2530 level, which will be followed by the renewal of historical highs.
The main topic of discussion in the financial markets remains the results of the conference in Jackson Hole. Jerome Powell, his colleagues from the Fed, as well as representatives of most regulators from other countries confirmed their intentions to cut interest rates in the coming fall. Monetary policy easing is traditionally favorable for gold, and the data of the U.S. Commodity Futures Trading Commission confirm this pattern. Over the past week, the net long position in gold increased to 236 749 contracts. This is the highest since the beginning of 2020.
There is also a rise in activity among investors in gold ETFs. SPDR Gold Shares, one of the largest gold-backed exchange-traded funds, has recorded cash inflows for the 8th week in a row. The last time such a streak was observed was 4 years ago. According to Citi estimates, gold ETFs lost 250 tons of assets in 2023, but the trend has reversed this year. Moreover, in 2025, the funds may attract 275 tons of the yellow metal and its price will reach $3000 per ounce.
The physical gold market is also seeing an increase in demand, especially in India. The festival and wedding season is coming up soon in the country, and for that reason the authorities have reduced import duties on the yellow metal. In addition, the weakening of the dollar on the world currency market has made gold more affordable for international buyers. While the gold price in dollars is very close to the record level, in rupees it’s still 4% below the July high.
The nearest target of buyers in the gold market is to reach the level of 2530. If successful, there is a good chance of testing the 2545 level.
The following trading strategy can be suggested:
Buy gold at the current price. Take profit 1 — 2530. Take profit 2 — 2545. Stop loss — 2495.
