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Gold’s Incremental Growth: How Does the Rally Look Like?

10 April 20244 mins read by Angel One
Gold has been having an unbelievable rally and this rally has prompted many to reconsider their options for investments, many wonder how long will the rally sustain.
Gold’s Incremental Growth: How Does the Rally Look Like?
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The gold market has ignited a powerful rally in 2024, signaling the dawn of a new era with the potential for sustained price increases. This surge, characterized by a relentless climb, has finally shattered the long-standing pivot at $2,075. While this pivotal level has been a topic of discussion among experts and analysts for years, its breach now stands as a testament to the dynamic nature of the gold market.

If we further look at the price changes between periods, it’d be quite evident how big of a rally gold has seen:

Time Period Returns
30 Days 9.17%
6 Months 25.56%
12 Months 17.46%
5 Years 82.75%

A Look into the Rally

Zooming in on the monthly chart provides further insights. The long-term inverted head and shoulders pattern finally yielded to a breakout. Multiple attempts to breach the neckline occurred until March 2024, when the market closed resolutely above the breakout line. This development reinforces the bullish sentiment and paves the way for an extended rally in the coming months.

Each dip became a chance to engage with the market, adhering to the strategy that adversity conceals opportunity. This mindset gained further support from another bullish setup observed on the monthly chart—a consolidation phase spanning $2,075 to $1,680, as discussed in 2022. The eventual breakout above $2,075, following the inverted head and shoulders pattern, signifies a departure from the long-term trend and hints at potentially loftier prices.

While pinpointing precise price targets remains challenging, the ascending broadening wedge pattern (previously shared with premium members in 2022) provides valuable clues. The breach above $2,075 opens the path for prices to ascend toward the upper limit of the ascending broadening wedge—approximately $3,000. 

Factors Pushing Gold Up

1. Central Banks

Central banks, particularly China’s, have significantly increased their gold reserves, with a notable addition of 160,000 troy ounces in March. Other countries like Turkey, India, Kazakhstan, and some Eastern European nations have also been active buyers. These purchases, along with ongoing geopolitical tensions, have provided strong support to the gold market.

2. Market Speculations

Market speculators are anticipating rate cuts by the U.S. Federal Reserve by June, despite conflicting signals from strong economic data. The likelihood of rate cuts, currently estimated at around 52%, could impact gold’s ability to maintain its gains. However, the recent job growth figures in the U.S. have exceeded expectations, casting doubt on the timing of these cuts.

3. Overall Precious Metals Rally

The rally in gold prices has had a ripple effect across the precious metals sector. Spot silver has climbed to its highest level in nearly three years, and platinum group metals are beginning to catch up. The sector is benefiting as a whole from the high price of gold, with platinum and palladium also experiencing significant price increases.

Conclusion: There’s huge global interest in gold right now and many of the price movements we see suggest that gold holds a strong position to sustain its gains because of the geopolitical instability, the analysts also suggest the price movement on the charts shows there might be significant gains still left until the year-end. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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