The modern-day gold rush continued to hit new highs this week, with a fresh record peak at $4,059. Demand for bullion has been incredible this year, with the usual suspects having sustained a blistering rally: from geopolitical uncertainty over lingering inflation woes to huge debt buildup and the prospect of Fed rate cuts.
Many investment banks have been ratcheting up their forecasts for year-end and 2026. Goldman Sachs raised its December 2026 projection by $600 to $4,900 due to ETF inflows and probable central bank buying. The latter is interesting as the People’ Bank of China extended its buying streak in September for an eleventh straight month, despite record high prices. Strong ETF demand has been seen in recent weeks too, with last week’s holdings rising to the highest level since September 2022. It’s even been interesting reading about ‘FOMO’ type behaviour in bullion as ETF holdings continue to grow.
The ongoing US government shutdown has added to the uncertain outlook and the ‘debasement trade’ is being talkied about increasingly, with data delays cementing a Fed 25bps rate cut at the end of this month and another in December given an 80% chance. Lower rates benefit gold as it doesn’t pay interest. The debasement trade is all about waning faith in fiat currencies in the face of persisitent governement deficits and inflation.
The monthly relative strength index (RSI) moved above 90 for the first time since the 1980s, suggesting short-term overheating. Resistance is expected in the $4,100/4,150 range, where some profit-taking may emerge which was seen yesterday, unsurprising after the 54%+ rally this year. The Gaza ceafire also might reduce some of the safe haven buying. But talk of FOMO and a paradigm shift among investors who have structurally under-owned bullion means gold may see solid dip buying.