A fundamental shift brings gold prices closer to $1,800.
Gold's new bullish momentum is more than just a technical market overpricing.
The biggest factor supporting gold's new upward trend is the change in investor expectations for the Federal Reserve's monetary policy. Although the Fed will continue to raise interest rates in early 2023, the pace is expected to slow down. At the same time, inflationary pressures will remain elevated.
According to the CME FedWatch Tool, next month, the US central bank will raise the federal funds rate by 50 basis points.
The gold market managed to hold onto last week's gains, its best performance in about two years.
Gold's rally is also confirmed by strong selling in the US dollar, with the index dropping to a roughly three-month low below 106 points.
At the same time, US bond yields plummeted below 4%.
The current momentum of gold is facilitated by the fact that retail and institutional investors largely do not own precious metals. The share of gold ownership is about 0.5% of assets on the stock market under management, which is significantly lower than the peak of 2011, which was 1.5%.
The economic outlook is getting bleaker than the IMF's October estimate.
As for what will continue to push the price of gold after a relatively calm and benign summer, there are several risks in the market that make gold an attractive safe-haven asset in the long term.
The current chaos in the cryptocurrency markets is destroying the former income of investors. The collapse of major cryptocurrency exchange FTX could increase the attractiveness of tangible assets.
Finally, after the midterm elections are over, financial troubles could start to mount, threatening the stability of the US dollar.