Time Stamp
Prices as of 1:53 p.m. EST 8 January 2024 $2,033.60 (Basis the February 2024 Comex contract).
Recommendation: Sell
Initial Target Price / Range: $2,010
Initial Timeframe: 8 January 2024 to 22 January 2024
Gold prices have been retreating overall since touching a record high of $2,152.30 on 4 December. Prices more recently peaked at $2,098.20 on 28 December, but were unable to hold onto these levels. The bullish sentiment and the speculation that pushed prices higher in December has been dissipating. Some of this sentiment was based on speculation that the Federal Reserve would lower interest rates in 2024 by perhaps 100 to 200 basis points. This view may have gotten ahead of itself and not accurately reflected the reality of current interest rate policies and market conditions.
If interest rates are lowered, they could be by less than 100 basis points. The Fed has made it clear that a 50 to 75 basis point decline over the course of the coming year seems more realistic to expect. The market needs to pay attention to the cues the Fed and other central banks are providing
Markets started 2024 by recalibrating their expectations of interest rate cuts this year following mixed signals regarding conditions in the U.S. economy, based on data released last week. This was coupled with profit taking following the healthy run up in prices since early October 2023. Gold prices, alongside other markets, should be expected to remain volatile in coming weeks. While markets have reined in, to some degree their expectations regarding interest rate cuts during 2024 still seem to need more adjustments.
Markets will now turn their attention toward U.S. inflation data (CPI and PPI) which will be released Thursday and Friday this week. If there is an upside surprise in inflation figures or if the data suggest that the next leg of inflation reduction will be harder to materialize it could boost bond yields and weigh on gold prices. If Inflation figures do not deviate much from the recent trend, which is an overall decline in inflation, then gold prices could see some gains. There also are several U.S. 10 and 30 year Treasury bond auctions scheduled for this week. The increased supply of bonds could weigh on bond prices and lift bond yields, further weighing on gold. Gold is like to retest $2,010 and a potential break below this level could lead gold prices toward $1,995.
CPM has one-month, three-month ranges and eight-quarter quarterly price projections with greater discussion of the factors behind CPM’s analyses provided in CPM’s monthly subscription service, the Precious Metals Advisory.
While short-term trade recommendations provide high risk – high reward opportunities for investors, it is difficult to capture the complex web of factors affecting precious metals prices and the nuanced CPM analyses of these factors that goes into our firm’s price projections. In addition to these short-term outlooks, CPM Group provides clients enhanced trade recommendations that include one and three month price projections, as part of our Retail Investor Program. Contact CPM at info@cpmgroup.com for details.
Notes:
Initial Target Prices and Timeframes are just that: Initial. If CPM does not issue a new Recommendation during or after that time it indicates that CPM maintains the posture in the most recent Trade Recommendation. Position may be closed out once target price is reached, within the noted discretion or until CPM provides new trade recommendation. CPM may have reported to have closed out of prior trade recommendation at its discretion before publicly publishing new trade recommendation due to processing time.
Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target.
CPM’s preferred investment strategies use physical, futures, forwards, and options.
CPM Group wants to thank the following companies for helping us make these short Trade Signals available free of charge, and for their commitment to providing good information in opaque and asymmetrical commodities markets.
Kitco
Metallic Minerals
Stillwater Critical Minerals
Granite Creek Copper
