The first attempt to break above the $2,000 mark came in 2020 and while that was promising, it ultimately failed before gold prices saw more of a consolidation. Then, there was that attempt in March last year but that also only lasted for a day or so before losing all altitude as central banks are on the warpath against inflation.
Now that we're running towards the sunset stages of the tightening cycle, it looks like it may finally be time for gold to shine.
There was already a stellar run up at the start of the year (as per the usual seasonal factors) before a pullback in February. That was ultimately defended by the 100-week moving average (red line) and also close to the 100-day moving average at the time, before a rousing rally amid the banking turmoil to back above $1,900.
That culminated with an attempt to breach the $2,000 mark two weeks ago but that was thwarted. But perhaps after some rethinking, are gold bugs seeing reason for a stronger breakout this time around?
For one, it is no coincidence that this is happening alongside the developments in the bond market as highlighted here.
But just as the question is for bonds, it is the same for gold i.e. is this where we see a peak in Fed rates and a return to lower yields?
If so, that's going to be a major tailwind for gold. And at this point, it just looks to be a question of timing. The Fed meeting next month is going to be pivotal in that sense. Markets are waiting for the big pivot and they will watch that as a sign. As such, that puts a lot of emphasis on the US jobs report later in the week.
In turn, that might very well determine if the break above $2,000 in gold can be sustained and perhaps even, the potential for it to breach the 2020 and 2022 highs around the $2,070-75 region next.
