The Gold Price Correction: What’s Next for Gold?
The gold price corrected this week, briefly falling below US$2,300 per ounce. While this is a drop from the levels seen earlier this month, experts remain optimistic about the yellow metal’s price activity.
According to Craig Hemke of TFMetalsReport.com, the recent pullback is entirely normal. Hemke emphasized that in the world of investing, things never move in a straight line, and a “two steps forward, one step back” pattern is healthy for the market.
Looking ahead, Hemke sees significant upside potential for gold in 2024. He pointed out that there are many technical targets aligning with US$2,650 or even US$2,700 per ounce. While these levels may not be reached this year, Hemke believes that gold could finish the period at US$2,400 or US$2,500.
“Let’s just say, maybe we can finish the year at US$2,400, US$2,500. That would be a pretty good year, that would be 20 percent — that would double what the average has been since the turn of the century” — Craig Hemke, TFMetalsReport.com
The movement in gold prices comes amidst intriguing economic data. On Friday, the latest Personal Consumption Expenditures (PCE) price index figures from the US were released, showing a 2.7 percent year-on-year increase and a 0.3 percent rise from the previous month. PCE is a key measure of inflation for the US Federal Reserve and is closely watched as the central bank prepares for its upcoming meeting.
Of even greater interest was Thursday’s GDP report, revealing that the US economy grew at an annualized rate of 1.6 percent in Q1, a decline from the 3.4 percent growth seen in Q4 of the previous year. With inflation still below the Fed’s 2 percent target, concerns are rising about the potential for a stagflationary scenario.
Bullet briefing — Anglo rejects BHP, copper hits US$10,000
Major diversified miner BHP made waves this week with a US$39 billion takeover offer for Anglo American, another global mining giant. However, Anglo American promptly rebuffed the proposal, labeling it “opportunistic” and stating that it undervalues the company’s prospects.
“The combined entity would have a leading portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore and metallurgical coal and future facing commodities, including potash and copper” — BHP
BHP is expected to come back with another bid in the future.
Copper price hits US$10,000
Should BHP and Anglo American merge, they would become the world’s largest copper miner, drawing attention to the red metal. Copper has been in the spotlight since mid-March when Chinese smelters announced plans to reduce output in collaboration. This move, driven by dwindling copper supply, led smelters to significantly cut treatment and refining charges.
This week, copper prices reached US$10,000 per metric ton for the first time in two years, reflecting broader recognition of the metal’s tight supply-demand fundamentals. While Chinese demand remains a concern, the shift towards green energy is expected to boost copper consumption in the years ahead.
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Securities Disclosure: I, Charlotte McLeod, do not have any direct investment interest in the companies mentioned in this article.
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