Gold prices whipsaw, sees pump and dump pattern
Gold skyrockets to $1,135, driven by global tension and rate cut bets.
Today, gold had a complete blowout, reaching new all-time highs of $1,135 during Asian trade. The catalyst for this surge is uncertain, but many point to traders betting on rate cuts and increased global tensions, including an attack on a US warship in the Red Sea.
Following a typical pump-and-dump pattern, the price of spot gold took more than a $100 hit later in the day, settling at $2,026 by 15:20.
The recent gold price frenzy has been fueled by easing inflation, soft labor data, and a more cautious approach from the Federal Reserve. Traders are now banking on interest rate cuts starting in early 2024. Federal Reserve futures currently give a 97% chance of unchanged rates in December, with a 60% probability of a 25 basis point cut to 5-5.25% by March. Lower rates make gold more appealing by reducing its opportunity cost.
Looking forward this week, key risk events for gold include the November jobs report and upcoming inflation data. Despite pockets of economic strength, a continual decline in inflation could further solidify trader convictions of an imminent policy shift.
