Massive buying, world gold price increased dramatically

Gold futures prices rose sharply in the final trading session of the week, reaching a record high of 2,730.5 USD/ounce on the December Comex futures contract.

Investors rushed to buy as safe-haven demand increased. Now bullish technical factors continue to push the precious metal higher. Geopolitical tensions in the Middle East remain high. Recently, Israeli Foreign Minister Israel Katz announced the killing of Hamas leader Yahya Sinwar.

According to Reuters, the Israeli military said Yahya Sinwar was one of three Hamas members killed in a ground attack in the city of Rafah in the southern Gaza Strip, but did not specify when it happened.

Central bank buying has been a key driver of this year’s record bullion rally. Officials from central banks in Mexico, Mongolia and the Czech Republic touted their increased holdings of gold reserves at the industry’s annual conference hosted by the London Bullion Market Association on Monday.

Gold as a percentage of national reserves is likely to rise in coming years amid rising geopolitical tensions and lower interest rates, officials said.

Despite the gold price surge, representatives of the central banks of the Czech Republic, Mongolia and Mexico said at the conference that holding gold in reserves remains important, although each central bank has its own reasons.

Elsewhere, China's economic growth slowed to its weakest pace since early 2023, with the property sector remaining a drag. China's third-quarter GDP grew 4.6% year-on-year, down from 4.7% in the previous quarter but slightly above the consensus forecast of 4.5%.

However, both industrial production and retail sales in China beat forecasts. China's central bank also launched two financing programs on Friday. The country will lend 800 billion yuan to financial companies to support capital markets. Under the program, brokerages, fund managers and insurance companies will be able to receive central bank financing by pledging assets to buy stocks, Reuters reported.

Also according to Reuters, at the BRICS summit in Kazan from October 22-24, Russia will support a new international payment system to overcome the dominance of the US dollar and avoid Western sanctions. Russian President Vladimir Putin aims to strengthen BRICS.

BRICS was only founded in 2006 by Brazil, Russia, India and China, with South Africa joining in 2011. This year, four countries – Egypt, Iran, Ethiopia and the United Arab Emirates (UAE) – officially became BRICS members. Saudi Arabia has also been invited to join the group and attend BRICS meetings, but has not yet become a full member. More than 30 other countries, including NATO member Türkiye, have applied to join.

Precious metals traders will be closely watching the above conference and its “de-dollarization” implications.

Technically, December gold bulls have the strong overall near-term technical advantage. The bulls’ next upside price objective is a close above $2,800/oz. The bears’ next near-term downside price objective is a push below $2,650/oz.