Gold Price Outlook – May 2024

“Gold Price Outlook
Gold prices continued to surge during April, building on the momentum that took root during the second half of February. Prices broke several records along the way, with the final record price, in the current leg up, reached on 12 April, when prices touched an intraday high of $2,448.80. Prices have cooled off since then but remain at historically elevated levels. Gold prices for the most part have been consolidating between $2,300 and $2,350 since the third week of April.

While CPM Group continues to expect higher gold prices as the year progresses, over the next few months there is a higher risk that gold prices move in a sideways to lower fashion. Prices could slide toward $2,150 during such a down move, although a larger drop to around $2,040, a level seen as recently as late March, cannot be completely ruled out. While these declines might appear sharp to some gold market observers, even a drop to $2,040 would mean that gold prices are only back to levels they were at during the start of March 2024.

There are various fundamentals that support high gold prices, but the recent move up has been extremely strong and has occurred over a very short period of time. There already are some signs of pull back in demand from longer term price sensitive investors, fabricators, and central banks. The market also enters a seasonally weak period over the next few months. The strong move higher over the past couple of months has drawn a lot of short term momentum investors. These investors would be quick to exit the gold market if they or their computer models feel that the current up move is complete. A close below $2,285 could trigger such a sell -off.

As mentioned earlier, CPM Group continues to foresee higher gold prices as the year progresses, and with this forecast in mind, any weakness in gold prices toward $2,150 or $2,040 should be used as a buying opportunity.

While weaker prices over the next few months is CPM Group ’s base case scenario, there is also the possibility that gold prices continue to consolidate in the present range and head higher. That said, a lot of the positive fundamentals for gold already seem factored into prices for now, which coupled with seasonal weakness and reduced demand from fabricators, central banks, and price sensitive investors could make moving higher more challenging.”