gold daily chart April 4
gold daily

Gold is going for it.

A slump in the US dollar on soft job openings data has the market feeling more confident that Fed funds are near a peak and that rate cuts are coming. That's led to a big bid in gold as it races through $2000 to $2020, up $35 on the day. It's the best level since a brief rally above $2000 early in the Ukraine war.

Zooming out further, you can see the trouble that gold has had with the $2000 level in the past. The previous peaks were $2072 and $2069 so it will need to get through that area -- preferably on a weekly close before it makes a run at higher levels.

gold weekly

Citigroup sees $2300 coming in the short term.

“Gold has found itself on solid ground so far in 2023 with prices averaging ~$1,895/oz year-to-date as the U.S. Dollar’s strength tapered and inflation abated slightly as oil came off its peaks. Citi sees see four potential macro drivers for the market here: (1) STIR traders repricing to a significantly lower terminal rate and putting 2H’23 insurance cuts back on the table, prompting a rapid rally across the rates curve; (2) concerns about potential systemic risk as potentially deflationary or increasing likelihood of recession, leading to investor demand for the ‘lower vol’ safe haven; (3) light positioning for gold ETFs and options heading into the March 22 FOMC; and (4) physical gold having no counterparty credit risk.”

Another factor is sovereign flows. The latest rally in gold started in Q4 on signs of sovereign accumulation with Chinese and Russia buying increasingly likely as both countries -- and perhaps some of the middle east -- grow weary of holding US dollars after Russian reserves were frozen.