VT Markets Q4 Gold Outlook: Anticipate a "Gold Frenzy"

The precious metal initially extended its choppy performance from May and June before surging in July. Benefiting from favourable market conditions, gold first reached several new highs, climbing from $2,000 to $2,685 per ounce—a gain of over 30%. However, the rally was followed by a correction, leaving traders uncertain about its future trajectory. Despite this pullback, the VT Markets Research Desk suggests that gold's bull run is far from over, anticipating even stronger momentum as we head into the fourth quarter.

VT Markets see multiple factors supporting gold's safe-haven appeal in the coming months. One of the primary drivers is the shift in global monetary policy, with major central banks embarking on rate cuts. As real interest rates decline, the appeal of non-yielding assets like gold increases.

Furthermore, geopolitical instability in the Middle East is intensifying. What began as proxy conflicts escalated into direct confrontations when Iran launched 180 ballistic missiles at densely populated areas in Israel this October. This escalation has heightened the visibility of this conflict and has in turn boosted gold's attractiveness as a safe-haven asset.

Political uncertainty in the U.S. will also play a role in gold's trajectory. The presidential race between Donald Trump and Kamala Harris is tight, with both candidates maintaining solid voter bases. With the outcome too close to predict, markets are becoming risk-averse, driving substantial capital into gold as a hedge against potential turmoil.

Emerging markets are also contributing to the upward pressure on gold. Although China paused its gold purchases in the second quarter, it has showed no signs of selling reserves in the following months. Meanwhile, countries like Turkey, India, and Poland continue to increase their gold holdings. A 2024 central bank survey reveals that 29% of institutions plan to expand their reserves within the next 12 months—the highest level in six years—citing gold's ability to mitigate default risks, hedge against inflation, prevent recessions, and provide liquidity.

From a technical perspective, gold's previous resistance levels failed to hold, transforming them into critical support zones. Our Reserach Desk identifies the $2,550 per ounce level as a pivotal point for potential pullbacks. Should prices revisit this level, traders might find buying opportunities for mid-term bullish positions. Given the convergence of supportive factors, the likelihood of prices dropping below this range in Q4 is minimal.

The fourth quarter presents a perfect storm for gold's performance. Declining interest rates, geopolitical risks, election-related uncertainties, and increased central bank gold purchases all point toward continued bullish momentum. We expect that gold's upward trend will resume, offering attractive opportunities for traders to capitalise on this volatile environment. Traders are advised to stay vigilant and monitor key technical levels as the market evolves.

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