After sliding $100, could gold touch fresh highs?

At the time of writing, the price of gold ranges between $1983.20 to $1983.65 per ounce. According to analysts who are long active gold at $1994/oz, the market selloff in gold is almost over, and prices will next reach new all-time highs as they anticipate imminent selling exhaustion in precious metals and rising discretionary desire to boost the yellow metal towards new all-time highs.

The price of June Comex gold futures recently traded at $1,986.30 as the market for gold plummeted two weeks after reaching new highs. Since reaching those record highs at $2,085 on May 4, this is about $100 down.

Analytics claim that, barring margin calls brought on by a catastrophic breach of the debt ceiling, selling exhaustion in precious metals may be close at hand. The hurdle for algorithmic gold liquidations to drive down prices is high, while Shanghai trader length is getting close to year-to-date lows. Additionally, dry-powder analysis shows that position sizing for gold bulls is still close to average levels, which suggests that the recent downturn caused less suffering.

Evidence implies that there are still some trading flows available for gold bulls to invest in and drive prices higher. Given the close historical connections between market expectations for a deepening Fed tightening cycle over the coming year and gold, analysts also anticipate discretionary capital to move towards the precious metal. Despite the fact that gold prices may be close to all-time highs, the positioning pattern is still inconsistent with a cycle peak.

It anticipates that gold will hit the anticipated new peak of $2,150 by the end of the year. Given that markets are expected to price in a deeper cutting cycle over the coming 12 months, discretionary traders may have a significant impact on helping gold prices firm.

A growing discrepancy between market expectations and what the Fed’s dot plot indicates has hurt gold over the past week. The Fed signalled a halt in June, yet some Fed officials are remained hawkish, creating a confusing narrative.

Until the new Fed dot plot is revealed at the June meeting, the expectations for a rate hike by the Fed may remain uncertain. Around $1,965, there is a lot of support. Although $2,150 is still our expectation, it won’t be sustained until the latter part of the year, when it is more likely that the Fed will ease.