(Kitco News) - Gold’s breakout rally above $3,500 an ounce has pushed the market into overbought territory; however, prices still have room to move higher as uncertainty continues to dominate sentiment in the global marketplace, according to one market analyst.
In her latest gold report, Suki Cooper, Head of Commodities Research at Standard Chartered Bank, said she expects gold prices to average around $3,700 an ounce in the fourth quarter.
“The most recent run over the past week has been fuelled by a cacophony of factors, including continued uncertainty around tariffs, expectations of monetary easing, growing U.S. debt concerns, and concerns over Fed independence,” she said. “Gold’s safe-haven appeal continues to grow ahead of the U.S. employment data and the September Fed meeting.”
In her report, Cooper noted that not only has gold reached fresh all-time highs against the U.S. dollar, but it is also seeing broad gains against all major global currencies. She emphasized that this broad-based demand will continue to support gold’s long-term uptrend.
“Unsurprisingly, gold volume traded has picked up on a global basis, but two areas stand out. First, gold ETP buying accelerated at its fastest pace since February over the past week, and second, volume traded on the Shanghai Gold Exchange accelerated at a faster pace than in other key regions. The rally has not been concentrated in just one region,” she said.
Gold’s rally began after Federal Reserve Chair Jerome Powell signaled a shift in U.S. monetary policy during his speech at the central bank’s annual symposium in Jackson Hole, Wyoming. Powell said the shifting balance of risks may warrant an adjustment in monetary policy.
As a result, markets began aggressively pricing in a rate cut later this month, and rising inflation has done nothing to change those expectations. Cooper, who remains positive on gold, said disappointing economic data could push expectations for more aggressive easing.
“Gold, like other markets, is focused on the U.S. NFP and the September Fed meeting. According to our macro strategists, any August NFP number below 40k would move the market towards a 50bps cut,” she said.
