Gold futures — why are they trending again?

Gold futures remain in the zone of investor interest over the past 3 quarters. Quotes of the yellow metal are constantly going up ⬆️. Even minor corrections in April and May did not affect interest in the protective conservative asset.

Majority Gold futures forecastsThey agree: you need to buy. And not just carefully, if possible. The goal is to invest with the maximum level of activity 💪. Rating Forex figured out why gold is so popular and how long this trend will remain.

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Gold futures. What drives its price?

2024 is called the year of the gold rush. The yellow metal has been rising in price for three quarters. The beginning of 2024 showed record data for starting growth over the last 7 years.

Gold is among the most sought-after financial assets in the world. Its price is influenced by dozens of factors. Some are very strong. Others are secondary. In the top:

• 🌍 Geopolitical upheaval. The outbreak of war in the Middle East, the confrontation between China and the United States, attacks on ships in the Red Sea – all this can only benefit gold. China has been actively increasing its reserves of the yellow metal for 18 months in a row. The decline in purchase volume started quite recently. In February, China bought 390,000 troy ounces, in March – only 160,000. In April, the purchase volume decreased to 60,000 troy ounces.
• 🧮 Economic problems. If economic problems begin in some countries, in an attempt to protect their capital, investors leave risky local assets for reliable gold. This pushes the price up.
• 📊 Level of consumption. Gold is used in jewelry and microelectronics. Over the past quarter, both sectors have shown steady growth in demand.

At a price futures ongole influenced by the investment factor. This is one of the most popular diversification tools. At the end of 2023, Western investors took profits when exiting gold assets. But there was no decline. Gold continued to go up. This is because eastern players decided to move their capital into this precious metal.

In April gold reached $2,400 per ounce. This is a historical maximum 💪. There was a modest drawdown in May. It was replaced by another jump to $2,500.

Now the precious metal is gradually losing its position. Most likely, the $2,400 figure will become a new support level. According to analysts, there are 5 key factors that contribute to this:

• 🎈 growth of inflation risks;
• 🎈 Fed rate cut forecast;
• 🎈 increasing reserves by central banks of different countries;
• 🎈 quantitative easing in China;
• 🎈 worsening geopolitical situation.

Gold futures chart shows the colossal distance that the precious metal has traveled in a very short period of time. No downward trends are observed. Only modest corrections against the backdrop of positive news 📰.

ChSome analysts believe that the influence of all the above drivers will increase due to the general deterioration of the geopolitical situation. This will continue to push gold to new highs ⬆️.

Most benefit options and futures for gold brought to mining companies. Together with the quotes of the precious metal they extract, their shares move up.

For example, in the Russian Federation, SGC securities added 45%. Polyus rose in price by 26%. Both companies look promising. They have serious growth potential, an impressive resource base and highly efficient production facilities.

🤝 AAnalysts believe that by 2026, SGC will increase gold production by 66%. All thanks to optimization of production and attraction of additional capacity.

WellMore gold mining companies pay impressive dividends. They are at least 50% of net profit after adjustment.

Gold as a defensive asset

The key task of gold in the global financial system is to protect capital from inflation 🔐. In 2023–2024, this was confirmed by the actions of a number of central banks. They accounted for more than 20% of the gold purchased during that period.

The Russian Federation has increased its gold reserves from 600 tons to 3,000 tons. China has reduced volumes, but continues to purchase. Moreover, there is an opinion: China actually has much more yellow metal than is reflected in official documents.

Over the past few years, the United States has greatly increased its money supply. Since the beginning of the 2000s, the figure has increased 4 times. This suggests that it will be very difficult for the Federal Reserve to cut interest rates.

🤝 Globally, liquidity is increasingly moving from Treasuries to gold. That is, central banks sell US debt securities and buy precious metals instead.

The Fed is a key factor for gold

IN 2024th FThe US Federal Reserve planned to reduce the annual rate by 125–175 points over 5–7 cycles. At that time, large American financial institutions gave forecasts for 100-125 basis points by the end of 2024. But already in the spring of 2024, their forecasts became much more cautious. They expect 3 cycles of decline of 75 points in total. Because of this, gold quotes continued to move up ⬆️.

Fed uncertainty still benefits gold. Although recent NFA reports have shown a weakening labor market. This should have forced the Fed to cut rates. But nothing of the sort happened.

🤝 Now the Federal Reserve says: it will go down only when inflation begins to confidently decline to 2%. If it remains at the same level (above 3%), there will be no reduction at all.

The ECB promises to soften monetary policy. This is planned to be done in June 2024. But the meetings held in March did not give even a faint hint of such a development of events.

🤝 If rates are nevertheless reduced, investors may develop a strong appetite for risky financial investments. The result will be an outflow of liquidity from gold.

TOhow to buy gold futures

Gold futures are traded on the derivatives market. To invest money in them, you need to open an account with a broker who works on the exchange where this instrument is available. For example, on the MICEX there is a futures contract GDRTSc1.

Buy futures – enter into a contract 📃 for the supply of precious metals for a certain amount. This is a speculative instrument. Therefore, it is not necessary to buy back the metal. You can speculate on changes in its quotes.

In addition to long buy transactions, futures can be sold. In this case, you will be able to make money from the fall in the value of the financial asset.

Rating Forex warns – urgent trading with leverage can lead to the loss of all capital and even the formation of debt to the counterparty ❗. Therefore, you need to enter into such trading only with a full understanding of all the risks.