Gold prices are on track for their strongest year in more than four decades, although they are expected to enter a short-term correction phase, according to precious metals experts.
After falling about 10% from a record high of over $4,390 an ounce, gold is on track to record its third consecutive week of decline. However, since the beginning of the year, gold prices have increased by more than 50%, marking the best performance since 1979 - a historic milestone for the precious metals market.
Investors and gold traders are closely watching the statements of officials of the US Federal Reserve (FED) for clues on the monetary policy orientation, a factor that is expected to determine the direction of gold prices in the short term.
Mr. Pranav Mer, Vice President for Commodity and currency Research at JM Financial Services Ltd, commented: "Gold prices are likely to continue to move sideways or adjust slightly, as the market focuses on inflation data, US Supreme Court hearings on tariffs, Fed officials' statements and economic data from China".
Meanwhile, Mr. Prathamesh Mallya, Deputy Director for Research on Non-agricultural Goods and currency at Angel One, said: Gold is still on track to record its strongest annual increase since 1979. If current foundational factors continue, market fluctuations could fuel a new rally in the coming period."
In the international market, December gold contract on comex increased by 13.3 USD, equivalent to 0.33%, last week, closing Friday's session at 4,009.8 USD/ounce.
Gold prices fluctuated around $4,000/ounce, stabilizing again after strong fluctuations due to expectations of changes in US monetary policy and employment data.
According to Riya Singh, Commodity and currency analyst at Emkay Global Financial Services, the report shows that US businesses announced their highest number of layoffs in October in more than two decades, boosting expectations of the Fed cutting interest rates in December. However, mixed signals from Fed officials and the lack of inflation data due to the US government's temporary suspension have made market sentiment more cautious.
Ms. Singh said that the outstanding increase in gold this year is mainly due to expectations of the FED lowering interest rates, net buying of more than 600 tons of gold by central banks, and stable capital flowing into gold-guaranteed ETFs.
