Gold prices below $2,000, but seasonals remain favorable

Although gold remains stuck below $2,000 an ounce, some analysts remain optimistic that all-time highs are an achievable target by year-end or into the new year.

In quiet holiday trading, spot gold prices have stabilized Thursday at an elevated level, last trading at $1,992.20 an ounce, up 0.15% on the day.

Analysts are not expecting to see much of a rally through the rest of the week as most traders are now focused on the U.S. Thanksgiving Holiday and Black Friday shopping. U.S. markets are closed Thursday and will open for half a day Friday.

Heading into the holiday, the gold market could not hold new gains above $2,000 an ounce as markets continued to digest the minutes from the Federal Reserve’s November monetary policy meeting, which were released Tuesday afternoon.

Although the central bank left interest rates unchanged at its latest meeting, the minutes show that the committee is maintaining a hawkish basis as they expect to hold rates in restrictive territory for the foreseeable future.

"The bullion price found strong support earlier in the week, as expectations that the Fed's rate hiking cycle had ended consolidated amongst investors."

"The resulting mood led to a two-and-a-half-month low for the greenback and saw treasury yields drop, in a dynamic that benefited the non-yielding precious metal," said Ricardo Evangelista – senior analyst at ActivTrades, in a note to clients Thursday. "However, the subsequent publication of hawkish Fed minutes cooled this enthusiasm, and the release of strong labour data on Wednesday compounded the sentiment of uncertainty as investors hesitated to call the next Fed monetary policy move. With the 'higher-for-longer' view lingering and receding expectations of a rate cut in the first half of 2024, the upside for gold prices may be limited."

Although gold prices have been capped in recent weeks, there is still optimism that prices will eventually move higher.

"Gold has put in a decent performance so far this week after trading down to $1,965 on Monday. It has crossed above the $2,000 per ounce level a few times," said David Morrison, senior market analyst at Trade Nation. "But, as in late October, gold has failed to hold this level as support and has been knocked lower every time it approaches $2,010. Nevertheless, it’s currently trading just underneath this key area and it feels as if it wouldn’t take much for it to have another attempt at an upside break-out."

With markets waiting for a new catalyst, analysts have said that seasonal factors could play a bigger role in the price action, which would be extremely bullish for gold.

In a recent interview with Kitco News, Adam Button, head of currency strategy at Forexlive.com, said that gold’s year-end seasonal trade is one of the most reliable in the market.

"You buy gold before Thanksgiving and sell it in February," he said.

Nicky Shiels, head of metals strategy at MKS PAMP, said that in the last five years gold has seen average gains of 2.7% between Thanksgiving to Dec.31.

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