Pepperstone logo
Pepperstone logo
  • English (UK)
  • Ways to trade

    Pricing

    Trading accounts

    Trading hours

    24-hour trading

    Spread betting vs CFDs

    Maintenance

  • Trading platforms

    Trading platforms

    TradingView

    MetaTrader 5

    MetaTrader 4

    Pepperstone platform

    cTrader

    Trading integrations

    Trading tools

  • Markets

    Markets to trade

    Forex

    Shares

    Indices

    Commodities

    Currency Indices

    Dividends for Index CFDs

    Dividends for Share CFDs

    CFD Forwards

    ETFs

  • Market analysis

    Market news

    Navigating Markets

    The Daily Fix

    Meet the Analysts

  • Learn to trade

    Trading guides

    CFD trading

    Spread betting

    Forex trading

    Commodity trading

    Stock trading

    Technical analysis`

    Day trading

    Scalping trading

    Candlestick patterns

    Upcoming IPOs

    Gold trading

    Oil trading

    Webinars

  • Partners

  • About us

  • Help and support

  • Professional

  • English (UK)
  • Launch webtrader

  • Ways to trade

  • Trading platforms

  • Markets

  • Market analysis

  • Learn to trade

  • Partners

  • About us

  • Help and support

  • Professional

Analysis

Gold

A huge day for the gold market – the chase is on

Chris Weston
Chris Weston
Head of Research
16 Jul 2024
Share
It’s been a momentous day for the gold market and client flows have been huge – where we’ve seen momentum-focused traders adding to long positions on the break of the prior all-time high (ATH) of $2450, while others see the move as having gone too far too soon and are selling into the rally.
Preview

The wash-up is that we’ve seen a new ATH in gold (XAUUSD), with the price pushing into $2469 and having the second biggest gain of the year (+1.9%). We’ve also seen new ATHs in XAUJPY, XAUSGD and XAUCNH, with XAUAUD and XAUEUR also looking strong as well – so the momentum in the yellow metal is not just a USD story.

Technically, gold has held a range of $2450 to $2285 since mid-April, but on the day, we see price breaking out topside emphatically, and where a measured move of the range suggests a target closer to $2600. We see that the price has pushed to a 2.11% premium to its 5-day MA, and 2 standard deviations above the YTD average, which speaks to the strength of the move.

The clear question is whether this can now kick into $2500 in the near term.

The ‘flow show’ driving the rally

A strong US retail sales print saw US Treasury yields rise a touch, which resulted in gold falling $14 to $2429. The selling didn’t last long though, and with the reversal lower in US Treasury yields, the USD found renewed selling activity, with gold seeing that as the point to stage a solid reversal higher.

Preview

Looking at volumes traded through the futures exchange, and we can see big accumulation volume into and after the post-US retail sales sell-off. This was then backed by big buying and accumulation flows when gold futures traded through the prior ATH (in front-month futures) of $2454, so one can argue that systematic momentum and trend-following players (CTA’s) have had a huge hand in driving the futures and spot gold moves today.

In the ETF space, on the day we saw the GLD ETF trade 11.048m shares, more than double the 15-day average. Flow-wise, and we can better inflows into the GLD ETF of late and that suggests investors are clearly warming to the evolving investment case.

The options market is also speaking out, with gold 1-week call implied volatility trading at a 1.5 volatility premium to 1-week puts. This is not yet at extreme reads, but the relative demand for short-dated call options is a sign of increasing bullish sentiment. It also results in market makers (who sold the calls) having to dynamically hedge their exposures as the price moves higher – again, that just perpetuates the move in gold higher.

The fundamental case behind the rally

Momentum and options-related flows aside, the question we hear from clients is what fundamentally is driving this move to new highs in gold?

There is typically seldom one reason, but often many factors at play:

  • The market has unwavering confidence that the Fed is about to embark on an easing cycle from September – as Fed rate cut expectations increase, gold has held a close, albeit inverse relationship with the level of rate cuts priced for the December FOMC meeting, and further out into late 2025.
  • Traders have seen that in 3 of the past 4 Fed easing cycles gold has rallied strongly in the six months after they ease. 4 cycles is perhaps not a huge sample size but enough for some to front run a potential re-run of form.
  • US real rates (i.e. US Treasury bonds adjusted for expected inflation) have printed new cycle lows, with the US 10-year real rate now at 1.89%. Gold has no yield, so when the real return in Treasuries falls, gold looks relatively more attractive.
  • US retail sales aside, the US economic data is moderating – while still a low probability, investors are seeing some attraction to increase gold weights in the portfolio against a possible recession and equity drawdown.
  • A hedge against rising protectionism – The betting markets price the prospect of Trump becoming President has risen to nearly 70%, and with JD Vance as Trump’s running mate, the prospect of a hard-lined protectionist approach towards China, Mexico and potentially Europe, has many questionings what this could mean for global trade and inflation.
  • A hedge against fiscal recklessness – should the Republican Party take the White House, House of Reps, and the Senate (i.e. a ‘Red Wave’) we could see a significant blowout in the US govt deficit.
  • The PBoC may have cut back on adding gold to its total reserves, but other EM central banks remain big buyers of gold, as do retail investors.

There are obviously other factors in play, and gold wears many hats. However, the fundamentals have clearly shifted to offer investors increased reasons to reweight gold holdings in the portfolio, and this has led to price-sensitive funds chasing the upside. And with broad-based positioning and sentiment not near extremes $2500 could well be tested soon enough.

 

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.

Other Sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to trade

  • Pricing
  • Trading accounts
  • Pro
  • Trading hours

Platforms

  • Trading Platforms
  • Trading tools

Markets and Symbols

  • Forex
  • Shares
  • ETFs
  • Indicies
  • Commodities
  • Currency indicies
  • CFD forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Meet Our Analysts

Learn to trade

  • Trading guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
+442038074724
70 Gracechurch St
London EC3V 0HR
United Kingdom
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy
  • Sitemap

© 2025 Pepperstone Limited 
Company Number 08965105 | Financial Conduct Authority Firm Registration Number 684312

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Trading derivatives is risky. It isn't suitable for everyone and, in the case of Professional clients, you could lose substantially more than your initial investment. You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone Limited is a limited company registered in England & Wales under Company Number 08965105 and is authorised and regulated by the Financial Conduct Authority (Registration Number 684312). Registered office: 70 Gracechurch Street, London EC3V 0HR, United Kingdom.

The information on this site is not intended for residents of Belgium or the United States, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.