What would it really take to cause the price of gold to fall?

Even though the dollar has strengthened and traders have priced in another 25 basis point Fed rate hike in the last week or so, this hasn’t worried gold prices at all. There was a slight decline back towards $2,605 earlier this week, but it didn’t last as prices recovered over the last two days. Now gold is up another 0.3% today to $2,638, posting a gain of nearly 28% since the start of the year.

After rising at the start of the year, gold experienced some consolidation from mid-April to June. And this is all before another rise, and there has been no real look back for gold so far this year. It was a breathtaking journey to new record heights several times in 2024.

The arguments for buying gold can be expressed very simply. Adam wrote a good post about it here. And it all still rings true.

But even as a gold bull, what surprised me most all year was gold’s resilience and laid-back behavior in the face of the many changes in global economic developments.

The most compelling argument for this year was that we will see lower interest rates. And even though the Fed’s rate cut expectations were pushed back, that didn’t stop gold prices from continuing to rise. Certainly central bank purchases are an important part of the narrative. However, it was hard to find any significant decline in gold on the charts.

The pace and extent of the rise is really outstanding in my opinion, although the ETF positioning doesn’t really do it justice either.

Despite all the recent narratives, I’m still a big fan of gold. But as I mentioned, it’s difficult to champion something that has been so one-sided over the last ten months.

I’ve said it before and I’ll say it again. I would really like to see a sharp decline in gold prices in the coming weeks before we move into the seasonal buying months of December and January.

Otherwise it will be quite tricky, even if the reasons for staying for a long time are still largely there.

I think that supposedly a pause in gold purchases by China would have been a good reason to take some of the top off. But then again, I suspect it’s China. And we can’t say exactly how reliable the reporting really is.

However, even with last week’s Fed pricing changes and higher dollar/interest rates, it has barely scratched gold’s armor. That’s something. The availability of safe havens amid events in the Middle East may be negating all of this, but we are also not seeing such movements easing, as has been the case throughout the year.

So far, the best reason I can argue for a decline in gold would be technical. It could be that a squeeze with some sort of trigger point is overdue. However, something like this has happened many times over the last few months and now here we are.

What are your thoughts on gold as the year comes to a close before we get to the seasonal rush in December and January? Is gold overdue for a pullback/correction? If so, what trigger are you looking for?