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Talking Gold — February 2024

3 min read
Head of Gold Strategy

Gold Market Recap & Outlook

Gold closed out January 1.14% lower with the spot price at US$2,040/oz.1 Despite this, January was the first full calendar month on record with the gold spot price remaining firmly above US$2000/oz, ranging from an intraday low of US$2002/oz and intraday high of US$2079/oz.2 From a technical perspective, the 50-day moving average also remained consistently above the 200-day moving average this month, another signal of price support at these levels. Continued consolidation for gold above the US$2000/oz psychological threshold is an encouraging sign for gold’s outlook.

Following its FOMC meeting on January 31, the Federal Reserve (Fed) kept its policy benchmark rates unchanged for the fourth consecutive meeting while also signaling that a rate cut during the next FOMC meeting in March would be unlikely. Fed chair Jerome Powell also stated that rate cuts are likely to commence at some point in 2024. This decision came following higher-than-expected US consumer inflation of 3.4% in December and US GDP of 3.3% in Q4, as the Fed remains committed to steering inflation towards its 2% target range.3

Anticipating the timing of a shift in US monetary policy this year remains a key catalyst for gold investors. Despite a strong and resilient gold price environment in recent months, investor activity has been mixed. Robust demand for retail investment bars and coins and net bullish positioning among speculators is in contrast with net outflows in gold exchange traded products for the third consecutive year in 2023, albeit at a slower pace. But this varied picture may pivot as expected interest rates cuts, rising geopolitical turmoil, and potential equity market pullbacks given current low volatility levels may push investors to gold for diversification and risk mitigation.

Globally, the fundamental picture for gold looks resilient as well. Central banks posted another impressive year of gold purchases in 2023, adding 1,037 metric tons of gold to their official reserves — nearly matching the 2022 record of 1,082 metrics tons.4 Meanwhile, jewelry demand remained relatively unchanged compared to last year despite an elevated price environment supported by China’s recovery — further indication of healthy consumer demand globally.

Gold’s Chart of the Month

Gold Performance Drivers

Flows
Global gold-backed ETFs registered outflows in January, the eighth consecutive month, as gold ETF holdings fell by 1.9%, according to Bloomberg data.5 COMEX managed money net speculative gold positions remained bullish at 56,024 contracts (as of January 30), led by a reduction in long gold futures positioning from last month.6

Factors
The US Consumer Price Index (CPI) rose to 3.4% year over year as of December 2023, up from 3.1% the month prior.7 US 10-year Treasury yields closed January at 3.91%, relatively unchanged from 3.88% at the end of December.8

Fundamentals
Global total gold demand in 2023 amounted to 4,899 metric tons, 3% higher than 2022 total demand. Central banks were net buyers for the 14th consecutive year with 1,037 metric tons of gold purchases in 2023.9

Gold Price Trends

Gold ETF Flows

Gold Futures

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