Gold has been performing well this year, with an 18% gain so far. Factors such as geopolitical uncertainty, central bank buying, consumer demand in China, and expectations of lower borrowing costs have all contributed to this positive trend. However, there are some obstacles that the precious metal may face in the near future.
One of the factors that could potentially slow down gold’s momentum is the possibility of a third rate cut by the Fed. While there are expectations for a rate cut in September, it may not be as significant as some investors anticipate. Additionally, the recent news regarding US Presidential candidate Trump’s assassination attempt could also impact the Fed’s decision on rate cuts.
Another factor that could affect gold prices is the slowdown in retail demand in China. Chinese retailers have been investing heavily in gold in recent years, but the demand seems to be slowing down. This, coupled with the possibility of progress in Israel-Hamas ceasefire talks, could lead to a short-term correction in gold prices.
Despite these potential obstacles, the technical outlook for gold remains bullish. The metal has broken key resistance levels and is heading towards its all-time high. Even if there is a retreat, it is likely to be limited above certain support levels.
Overall, while there are some challenges on the horizon for gold prices, the broader outlook remains positive. Investors with a longer-term horizon may not be significantly impacted by short-term fluctuations and may continue to see gold as a valuable asset in their portfolios.