What would it really take for a pullback in gold prices?

Even with the dollar having strengthened and traders scaling back to pricing in a 25 bps move for the Fed in the past week or so, it hasn’t really fazed gold prices whatsoever. There was a mild dip back towards $2,605 earlier this week but that didn’t last with prices rebounding in the past two days. Now, gold is up another 0.3% today to $2,638 and holding near 28% gains year-to-date.

After the rise earlier in the year, gold saw some consolidation around mid-April to June. All that before another run higher and so far this year, there hasn’t really been any looking back for gold. It’s been a stunning ride to fresh record highs on multiple occasions in 2024.

The case for buying gold can be put in very simple terms. Adam made a good post on that here. And it all still rings true.

But even as a gold bull, what has surprised me the most throughout the year has been the resilience and how nonchalant gold has been behaving in light of the many changes in global economic developments.

The most compelling case coming into this year was that we are going to see lower rates. And even though Fed rate cut expectations got pushed back, that didn’t stop gold from tracking higher. Sure, central bank buying is a key part of the narrative. But you could hardly find a meaningful dip on the charts in gold.

The pace and scale of the rise is really the standout in my view, with ETF positioning also not really matching up to that.

Despite all the recent narratives, I’m still a big fan of gold. But as I have mentioned before, it’s tough to be advocating for something with such one-sided movement in the past ten months or so.

I’ve said it before and I’ll say it again. I really would like to see a healthy pullback in gold in the weeks ahead before we get into the seasonal buying months in December and January.

Otherwise, it’s getting rather dicey even if the reasons for staying long are still largely in place.

I mean, China reportedly pausing on gold purchases would’ve been a good reason to take some off the top. But then again, I guess it’s China. And how reliable really is the reporting, we can’t be exactly sure.

But still, even with the changes in Fed pricing in the past week and higher dollar/rates, it has barely scratched the gold armor. That’s quite something. Safe haven bids amid the events in the Middle East might be negating all this but then, we’re not seeing such moves faded as has been the case throughout the year.

Until now, the best reason I can argue for a pullback in gold would be a technical one. We might be overdue a squeeze with some form of trigger point. However, there has been numerous times in the past few months for that to happen yet here we are.

What are your thoughts on gold as the year winds down before we get to the seasonal rush in December and January? Is gold overdue a pullback/correction? If so, what’s the trigger that you’re looking for?

This article was written by Justin Low at www.forexlive.com.