As we approach the conclusion of the year, the fervor surrounding the gold market seems poised to escalate, entering a potential record-breaking phase. Ben Emons, Head of Fixed Income at NewEdge Wealth, notes that December historically ushers in a heightened appetite for the precious metal, particularly following a stock market rally in November. Gold recently reached a historic pinnacle, closing at $2,089.70 an ounce, marking a nearly 2% increase.
Emons identifies both the economic and geopolitical landscapes as additional catalysts propelling gold’s positive trajectory. The uncertainties looming in the upcoming year, including elections and the specter of a possible recession, create an environment conducive to gold’s ascent. The precious metal tends to thrive during periods of market optimism, characterized by declining real rates and interest rates, fueling its breakout potential.
In a recent note to clients, Emons highlights the rarity of simultaneous gains in both gold and stocks, a phenomenon observed in November with gold recording a 3% increase alongside nearly 9% gains in the Dow and S&P 500. This alignment often occurs when markets factor in substantial easing cycles, a scenario currently unfolding in a moderate fashion, placing the spotlight on gold’s seasonal dynamics.
Anticipating continued strength into the following year, Emons underscores central banks’ persistent demand for gold amid diminishing supply, potentially setting the stage for a significant breakthrough toward $2,100. He envisions a scenario where lagging sectors, such as utilities, could rally and claim market leadership by early 2024.
“Fast Money” trader Guy Adami echoes the sentiment, emphasizing gold’s positive outlook driven by the recent performance of the dollar. If interest rates continue their descent, it could exert downward pressure on the dollar, providing a favorable tailwind for gold. Adami believes gold is on the cusp of a substantial breakout to the upside.
As the year draws to a close, gold has demonstrated remarkable resilience, closing in on a year-to-date gain of over 14%. The record gold rush appears to be not just a fleeting surge but a sustained ascent, fueled by a confluence of factors shaping the economic and geopolitical landscape. Investors are now closely watching the precious metal, anticipating further milestones and potential breakthroughs as the calendar turns.