Gold Price Outlook – November 2023

“During the first week of October, gold prices had fallen to their lowest level since March 2023. This weakness in prices that had started during the third week of September ended abruptly when prices rose in response to Hamas’ attack on Israel on 7 October. The market had become
extremely oversold during the first week of October. This state of being oversold coupled with the strong positive impulse from the surprise attack by Hamas resulted in a multi-day increase in gold prices, which wiped out the loss in value since 20 September. By the end of October, gold prices were testing resistance at the $2,020 level. While the Hamas-Israel war helped gold prices to rise initially and keep them supported at elevated levels, renewed expectations that the Fed was done with its tightening cycle helped to drive gold prices higher during the second half of October and into early November.

In the short term, most of the reasons for higher prices appear to be priced into the market. The Washington debt ceiling melodrama might provide a fresh piece of bad news to drive the gold market higher. That said, financial markets seem to have been inoculated against U.S. (and
other) politicians playing with public sentiment, ‘fixing’ things they have created at the last minute.

Gold looks vulnerable to a pullback at the time of writing this report. Economic conditions have been holding up well, inflation is heading in the correct direction (down), and rates remain elevated. These factors pose as headwinds to gold prices in the short term. Gold prices
could fall back toward $1,920 or even $1,900 before rising once again. These levels could provide longer-term investors with a buying opportunity.

There are many reasons to buy gold as a portfolio diversifier as was highlighted at the beginning of this report. The numerous political issues and the inevitability of a recession at some point in the future are two quick reasons to own gold. Strong gold buying by central banks as well as healthy demand for gold from China, basis its still high domestic price premium over the London gold fix are other reasons why gold prices could remain supported at elevated levels and rise in the near future. CPM Group would not be surprised to see gold retest its record high levels sometime in the next few quarters.”