Gold Digger: With a golden cross in play, ‘this is not the time to be bearish’ on the most stoic of metals

• Spot gold prices are still in a good… spot, as bullish golden cross technical pattern forms
• The World Gold Council has released its latest outlook – it leans mostly positive
• The week’s top ASX gold-related stocks led by: FAU, MKR, TSO

Notwithstanding a bit of current rangebound consolidation ahead of the next lot of imminent US jobs reports, the world of gold has had a good time of it of late.

It’s the most stoic of metals – shines in face of adversity, often the geopolitical kind.

Speaking of stoicism and gold, and before we look at the latest bullion pricing, here’s something that caught our eye the other day… A gold bust of the legendary Stoic Roman emperor Marcus Aurelius, found in a Swiss sewer in 1939, is going on display this week in the J Paul Getty museum in LA.

Golden bust of Emperor Marcus Aurelius from Avenches, western Switzerland, is going on display at the Getty. It is the largest known bust of an emperor made of a precious metal and one of only a handful of gold busts to escape being melted down.

Bust was found in a sewer… pic.twitter.com/hLJGTJYy7G

— Archaeo – Histories (@archeohistories) December 4, 2023

“When you rise in the morning, think of what a precious privilege it is to be alive – to breathe, to think, to enjoy, to love,” said the charismatic mentor of fictional bloke Maximus once upon a time.

Good call.

As for the rise of something else precious, gold’s looking solid in USD terms, still trading above the magic 2k mark at $2,035 just now, settling in a touch below the all-time-high it set earlier this week – US$2,152.

Down Under, the shiny one is changing hands somewhere around AUD $3,081, at the time of writing.

Golden cross just formed – good times ahead?

By the way, if you did indeed enjoy seeing gold hit fresh highs this week, perhaps don’t be too deflated about this little pullback we’re having right now. As Otavio Costa, a Brazilian financial pundit with global asset manager Crescat Capital, notes – the big picture is probably what’s most important…

Investors who have been spooked by the recent decline in gold after making new highs are missing the big picture here.

Fundamentally, nothing has changed.

We are on the verge of initiating a prolonged cycle for precious metals, and the recent volatility should be viewed as an… pic.twitter.com/oBtWuRECvw

— Otavio (Tavi) Costa (@TaviCosta) December 6, 2023

“Fundamentally, nothing has changed,” notes the analyst, adding:

“We are on the verge of initiating a prolonged cycle for precious metals, and the recent volatility should be viewed as an opportunity.

“This is a unique period where gold is leading the way, and all other assets strongly correlated to the metal remain historically undervalued.

“To be clear, this is not the time to be bearish on other precious metals and the miners. That was the right call a decade ago.”

Costa also points to a golden cross currently in the process of confirming for gold. That’s when a short-term moving average for an asset turns above its longer-term MA. And it usually signals an asset is turning a corner into a bullish phase.

Barchart here also confirms it – for gold futures – with the 50-day MA just breaking above the 200-day.

Gold Futures have formed a Golden Cross w/ an upward sloping 200D moving average pic.twitter.com/m4y0CvAUpb

— Barchart (@Barchart) December 5, 2023

There we have it #SHG 'Golden Cross' 📈Shanta #Gold

"golden cross is a bullish breakout pattern formed from a crossover involving a security's short-term moving average (50-day) crossing above its long-term moving average (200-day) or resistance level" pic.twitter.com/FHawWGj1xL

— Elias Jones (@EliasJones01) December 7, 2023

Is that a ‘mild buying tone’ in the air? 

Meanwhile, over at FXStreet, analyst Guillermo Alcala sees spot gold maintaining “a mild buying tone” ahead of Friday in America, when the Nonfarm Payrolls report is due to land.

“Investors are increasingly confident that the major central banks’ tightening era is over and speculation that rate cuts might come before previously thought is keeping bullion sellers in check,” wrote Alcala.

“The Federal Reserve is widely expected to leave rates on hold at their monetary policy meeting next week, with the market pricing in a 50% chance that rate cuts will start in March Next year.”

From what we’ve been reading lately, that 50% figure does seem about right – a bet each way on the Fed’s soft landing or slam into a heavier recession after all.

According to co-founder of Macro Intelligence 2 Partners Julien Bridgen, who spoke with financial outlet Kitco the other day, a soft landing is unlikely with, in his view, the Fed a long way from cutting rates.

It’s a view that runs contrary to plenty of other analytical takes. For instance, World Gold Council market strategist Joseph Cavatoni told The Australian yesterday that: “They [the Fed] look like they might be done (with rate rises) and that is likely to mean that money will move away from gold when those rate cuts occur.”

Bridgen’s favoured scenario, however, would support more bullish action on gold although it mightn’t be as good short term for perhaps large portions of your equities portfolio.

Gold doesn’t have a safe-haven rep as the ultimate inflation hedge for nothing.

“I think for gold to really break out you have got to see the equity market break down in the US, you’ve got to see the Fed then truly step back and start to cut rates and the dollar to go [down]. That I think would set you up for this solid breakout that we want, said Bridgen.”

World Gold Council: all looking pretty ‘stable’

The World Gold Council, which we’d like to think shares office space with the Jedi Council in a building on Coruscant (and so we will), has provided its latest update and outlook.

The TLDR on it is… in 2024 gold prices could go up, could go down… but probably not down and more likely up.

Essentially, it’s telling us things are looking “stable” for the most precious of precious metals next year. Fence sitting? Maybe, but no one’s got a crystal ball here, not even the Jedis.

The council cites geopolitical tensions, including major elections taking place in 2024, and continued central bank buying are the likely factors that will support gold and counter any softening in demand caused by a probable soft landing in the US.

Here are the WGC’s three potential scenarios for the yellow metal in 2024, which it places in order of probability:

1. Soft landing – “A flat outlook with upside potential. While market consensus points to a soft landing, this will be hard execute, noting seven of the past nine hiking cycles have resulted in a recession.”
2. Hard landing/recession – “Higher rates may spook markets, strong case for strategic gold allocations.”
3. No landing – “The unlikely reacceleration of inflation and growth could result in a flat to slightly weaker than average performance next year, noting Morgan Stanley’s view that, ‘a no landing is just a soft or a hard landing waiting to happen’.”

It’s a  65 per cent chance of a soft landing in the global economy for 2024, according to the WGC, which it said could deliver flat growth for gold and yet, and yet… still some upside potential.

WGC strategist Joseph Catavoni also suggested to The Australian that:

Diversification of a portfolio including gold would continue to be important for investors in 2024 as the world faced elections across much of the globe including in Taiwan, the UK, India and the US where polls suggest President Joe Biden and former President Donald Trump will square off again.

“There are a lot of elections to be held in 2024 and this creates a very uncertain outlook that could provide uplift to gold markets and other risk assets,” said Catavoni. “Markets are likely to react very differently to a Republican or Democrat outcome in the US.”

“The market consensus is set on a soft landing, and dovish commentary from the Fed has helped drive up gold prices to record highs this week,” noted Juan Carlos Artigas, the WGC’s global head of research.

“However, a soft landing isn’t written in stone and remains one possibility alongside a recession or even a ‘no-landing.’

 “Taking into account all relevant factors for 2024, including event risk and sustained strong central bank demand; we expect conditions to be in place that support a stable gold market at the least and even a possible surprise to the upside.”

Winners & Losers

Here’s how ASX-listed precious metals stocks are performing:

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.

Stocks missing from this list? Email [email protected] 

Best-performing goldies over the past week

The week’s biggest gains

First Au (ASX:FAU)  +100%

Manuka Resources (ASX:MKR) +56%

Tesoro Resources (ASX:TSO) +50%

Miramar Resources (ASX:M2R) +47%

Moab Minerals (ASX:MOM) +33%

Citigold (ASX:CTO) +33%

Metalicity (ASX:MCT) +33%

Castile Resources (ASX:CST) +25%

Right then, that’s a wrap for another week. It’s Friday afternoon, and Stockhead’s westies are having a Christmas party. We’ll drink to that. Just not faster than this talented entrepreneur…

infinite money glitch pic.twitter.com/MVLvjeuAFs

— non aesthetic things (@PicturesFoIder) December 6, 2023