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Gold’s Impressive Rally in 2024
Gold, traditionally regarded as a safe-haven asset, has experienced a meteoric rise this year. Trading at around $2,000 at the onset of the year, gold futures have reached a fresh record high of $2,708 last Thursday. This remarkable rally has been fuelled by expectations of significant interest rate cuts in 2024 and 2025, strong central banks buying, and global geopolitical tensions.
Further Rate Cuts Would Support the Precious Metal
Expectations that the Federal Reserve will start an easing cycle in 2024 has sent gold prices soaring. The Federal Reserve cut rates by 50 basis points at its September meeting with Fed chair Jerome Powell signalling on Monday at the National Association for Business Economics conference that he sees two more rate cuts by the end of the year, totalling 50 basis points.
A further 100 basis points cuts are projected in 2025, with the Fed expecting rates to fall to 3% in 2026. As interest rates fall the gold market gets a boost and is likely to continue to get support from the lower interest rate environment.
Additionally, lower interest rates are likely to trigger further depreciation of the U.S. dollar. Gold has an inverse relationship with the greenback; therefore, a falling U.S. dollar is likely to act as a tailwind for gold.
China’s Role in the Surge of Gold Demand
Gold has been one of the top-performing commodities since late 2022, with its price rally continuing for nearly two years. China’s aggressive gold-buying spree, which began in November 2022, has been a significant driver of this trend. Although China’s buying frenzy has paused in recent months, it’s likely not over yet.
In 2023, China’s gold purchases reached a remarkable peak with the People’s Bank of China (PBoC) increased its gold reserves by 30%. According to the World Gold Council (WGC), central banks – led by China – purchased a total of 1,037 tonnes of gold last year, with the PBoC accounting for more than all other central banks combined. This buying momentum continued into 2024, with net purchases of 290 tonnes recorded in the first quarter.
Geopolitical Risk Keeps Gold Prices Elevated
Gold’s status as a safe haven and a hedge against political risks remains unquestioned.
The latest developments in the Middle East increase the prospects of further escalation of the conflict and turning it into an all-out regional war. This heightened geopolitical uncertainty continues to support gold prices. With looming U.S. election and rising geo-political risks in Ukraine and the Middle East, gold’s demand is likely to remain strong.
Downside Risk Remains Limited
After hitting a new record high of $2,708 gold prices are seeing some selling pressure for three consecutive days. Optimism surrounding China’s stimulus measures is drawing investors towards riskier assets, leading to a shift in flows away from gold.
While China’s economic stimulus measures have increased appetite for riskier assets, the risk of escalating geopolitical tensions in the Middle East and the dovish Federal Reserve’s stance are helping to prevent a significant pullback in gold prices.
Source: TradingView
Technical Outlook: Gold is Overbought but Remains Resilient
Despite reaching overbought territory on a monthly, weekly, and daily basis following a stellar run, gold remains on the defensive, hovering just below last week’s all-time high.
While the overbought momentum conditions point to a likely pull back, market sentiment remains bullish. Therefore, any potential weakness in the short-term may be shallow, with first support arising around $2,570.
Such a pull back will not change the overall bullish outlook for gold and would present a good buying opportunity. Volatility could pick up around the Nonfarm payroll report on Friday; however, all eyes will be on the Fed’s next policy decision, which could trigger further gains for gold. Our long-term view on gold remains bullish and our target is in the range between $2,900 and $3,000.
Active traders looking for magnified exposure to gold may consider Leverage Shares +3x Long Gold or Leverage Shares -3x Short Gold ETPs.
For investors looking for income, IncomeShares Gold+ Yield ETPs provide exposure to the price of gold while offering a 5.87% annualised distribution yield.
Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.
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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
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The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
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Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
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Terms and Conditions
Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.
