Gold hits record high after near 3-year gap; $2,000 new support

Investing.com — It took almost three years, but it appears to have been worth the wait for gold longs.

Amid signs the Federal Reserve is ready for a ceasefire with its inflation-fighting rate hikes, gold in one swoop move crossed over to the other side of the rainbow that longs had awaited to revisit since the record highs of August 2020.

Gold for June delivery on New York’s Comex hit an all-time high of $2,082.80 an ounce before settling at $2,055.70, up $18.70, or 0.9%.

The spot price of gold, which reflects physical trades in bullion and is more closely followed than futures by some traders, hit an apex of $2,080.72 before consolidating to $2,046.65 by 14:00 ET (18:00 GMT), up $7.89, or 0.4% on the day.

Previously, the record high in both Comex gold and spot trading of bullion was at around $2,075.

Aside from the Fed’s wavering stance on whether another rate hike was needed in June — the central bank has made 10 raises since the pandemic, adding 5% to key lending rates that some say is choking credit — Thursday’s rally in gold was underpinned by broader concerns over the U.S. economy.

“The force is strong for gold bulls given all the banking turmoil and rising risks that the U.S. will have a tough recession,” said Ed Moya, analyst at online trading platform OANDA.

“The real economy is going to get knocked down a lot given what we are seeing with financials and that will keep demand elevated for safe-havens. Gold is going to shine given this macro backdrop and possibly eye a move above the $2,100 if the de-risking mood on Wall Street remains over the next few sessions.”

Since mid-March, gold has darted in and out $2,000 territory. To anchor itself there, the Dollar Index must not cross 101.47 while U.S. bond yields, led by the 10-year Treasury note, should remain under 3.47% on a daily closing basis, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.

Gold itself could lurch to $2,098 initially, and then towards $2,148 as looming risks of a U.S. debt default, a growing banking credit crisis and bets of a June pause in Fed rate hikes come to a head, said Dixit.

“A short term correction towards the support areas of $2,020-$2,010 could also turn into a buy-the-dips opportunity for those who lost out on the run to $2,080,” he said. “The upward momentum will remain intact so long as the daily close remains above $2,000 — making that the new normal for gold should the support hold.”