Gold prices fatigue signs: Gold market analysis

Gold has increased in January 70% of the time since 2000; however, 2024 will be one of those years in which it declines.

Update: 2024-02-13 07:25 GMT

Gold market fatigue indicators

According to a study conducted by the World Gold Council and gold market analysis, January is generally regarded as a favourable month for the price of gold. Gold has exhibited a monthly average return of 1.79 percent since 1971, a figure that is approximately three times its historical monthly average. Furthermore, January has generated favourable returns for gold approximately 60% of the time during this period; this percentage has increased to nearly 70% since the year 2000. On the contrary, an anomaly emerged in January 2024, when gold prices encountered a substantial decrease of approximately one percent. The unsatisfactory performance exhibited towards the beginning of the year has sparked conjecture regarding the potential attainment of a gold price peak. It is worth mentioning that gold prices experienced a significant increase, peaking at $2,135.39 per ounce in December 2023, before declining to $2,053 per ounce by the conclusion of January 2024. Gold defied conventional fundamentals by reaching a new high in 2023 under the assumption of high-interest rates. In 2023, gold prices peaked in each currency in which it was traded. Purchases by central banks constituted the primary factor driving the increase in gold prices.

Factors affecting gold prices:

In 2024, a lacklustre start can be ascribed to a multitude of factors. Withdrawals from gold-investing exchange-traded funds (ETFs) on a global scale increased in January. Increasing at 51 tonnes, these funds have experienced a continuous outflow of funds for the past eight months. Treasury yields increased, which expedited the withdrawal and exerted pressure on the lustrous metal. Traders have reduced their long position in Comex futures by 206 tonnes in addition to selling funds.

Gold price forecast:

Does the trajectory of the trends in gold prices indicate that prices may continue to decline?

Analysts anticipate that gold prices will rise once more before reaching a new peak, following a possible period of correction. The prospective reduction of interest rates by the US Federal Reserve generates optimism. A declining bond yield is favourable for the price of gold.


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