Precious metal prices stayed stable this week after a brief dip, with gold hovering around USD $2,000 per ounce and silver showing a modest 1% increase, trading above USD $24 per ounce. In Australia, prices for both metals retracted due to a 3% surge in the AUD, now at USD 0.671.
Equity markets witnessed significant gains, with the S&P 500 and ASX 200 rising by 3% in the past five trading days. Meanwhile, oil climbed back above USD $71 per barrel. Bond yields continued their decline, with 10-year yields in Australia and the United States nearing 4%, marking a drop of 0.40-0.50% in the last month alone.
This stabilization in precious metal prices followed a recent slump where gold briefly dipped below USD $2,000 per ounce and silver below USD $23 per ounce. The US Federal Reserve’s decision to maintain interest rates until Christmas, coupled with their future rate cut projection of up to 0.75% throughout 2024, halted the correction in precious metals and bolstered other asset prices.
Although markets anticipate a potential Santa rally before Christmas, concerns arise that the rapid surge in risk assets might have exceeded its sustainable pace, as indicated by the VIX rebounding from a four-year low.
Looking ahead, despite the recent fluctuations in December, the overall outlook for precious metals remains positive. Historical data reveals similar instances where gold experienced significant intraday rallies followed by a slight retreat before eventually reaching new highs.
ABC Bullion suggests that the recent pullback in gold could signal a support level around the mid to high USD $1,950-USD $1,975 per ounce range. This historical context maintains optimism for precious metals as the market progresses into 2024, potentially pushing gold above USD $2,100 per ounce, which could significantly impact sentiment and likely lead to a surge in silver prices as well.
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