Gold Is Closing In On An All-time High

Gold finished at a four week high on Friday, supported by data that shows inflation is falling, and some rumblings over potential bank failures. Also providing support recently is a weaker U.S. dollar, which is falling on expectations for lower interest rates in the U.S. by mid-year. Friday capped off a second straight week of gains for gold, increasing the case for a bull market rally.

Gold traders are also seeing a positive short-term technical picture for the precious metal. Recent action has seen a three-month long downtrend negated. The next level of resistance, which is considered quite strong, is at the $2,100 level. That’s just over $7 away from Friday’s close at $2,092.80 an ounce. Friday also saw gold hit a one-year high on an intraday basis, trading above the $2,095.80 level seen at the close of 2023.

Gold reached an all-time high of $2,135.39 an ounce in December 2023 and sits roughly 2% below that level now. If gold can top the $2,100  level it is possible we could see a test of that all-time high as early as next week, particularly if we continue to see a decline in the U.S. dollar.

Data out of the U.S. showed a weak manufacturing sector and a weak consumer survey from the University of Michigan. Add that to Thursday’s report on consumer inflation, which showed the slowest uptick in three years, and things seem to be adding up to a good year ahead for gold.

The real catalyst for a strong rally would be a Fed rate cut in the U.S. While hopes for such a cut in June are increasing, economic data and messaging from the Fed is till muddled enough to keep traders guessing.