The rally in gold showed little sign of slowing on Thursday, even as futures prices for the precious metal hit their highest intraday levels ever – for the 33rd time so far this year.
Gold is unlikely to hit a price ceiling anytime soon, says Michael Armbruster, co-founder and managing partner at Altavest. “The trend is up and the key drivers for gold remain unchanged – out-of-control federal spending that ultimately forces the economy into crisis [Federal Reserve] to lower the US dollar,” he told MarketWatch.
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“Foreign demand remains strong, and we will likely hear more from the BRICS bloc on their de-dollarization plans,” Armbruster said, referring to Brazil, Russia, India, China and South Africa. “Western investors have been slow to embrace gold, and if that changes, it could give gold a boost.”
On Thursday, gold for December delivery GC00 GCZ24 rose $16.20, or 0.6%, to settle at $2,707.50 an ounce on Comex, after hitting a high of $2,712.70. Based on the most active contract, gold futures marked all-time highs and intraday highs.
So far this year, based on the most active contract, gold has reached 33 intraday record highs – the most in a calendar year since 2011, when there were 38 record highs, according to Dow Jones Market Data.
Gold “is climbing against all paper currencies, not just the U.S. dollar,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management.
The precious metal was mainly supported by the European Central Bank’s rate cut on Thursday, “which reminds everyone that most major central banks have gone into easing mode, not just the Fed,” he said.
The ECB lowered its key interest rate by a further 25 basis points to 3.25%. The rate cut “adds to the belief that most central banks are on a long-term easing path,” said Peter Grant, vice president and senior metals strategist at Zaner Metals, adding that lower interest rates support gold.
Meanwhile, US economic data released on Thursday was somewhat mixed. Better-than-expected retail sales and factory data from the Philly Fed were offset to some extent by weaker-than-expected industrial production, Grant told MarketWatch. Gold prices fell shortly after retail sales rose 0.4% in September, then rose in the wake of a 0.3% decline in industrial production in September.
The uptrend for gold “looks strong, and I believe we can recover by the end of the year,” Grant said. “I continue to be impressed by gold’s resilience in light of the dollar’s recent rise.”
