Gold’s new peak of over $2,100 an ounce, scaled in early morning Asian trade on Monday, took its gain in 2023 to almost 16%. It almost immediately pulled back to below $2,100 an ounce on what several market reports attributed to profit-taking. But as the year winds down, it could certainly charge up the summit again.  

The most recent phase of gold’s bull run is mounting expectations that the Federal Reserve will keep rates steady this month and begin pruning next year. High US interest rates bolster the dollar and detract from gold, while lower rates are expected to undermine the greenback and lift the precious metal’s appeal.  

Gold’s rally has been underpinned by other factors. Its safe-haven status has been enhanced by rising geopolitical tensions fanned by the war in Gaza and Russia’s war in Ukraine. There is a fog of uncertainty about the global economy, and gold tends to thrive in uncertain times. 

There are also growing concerns about global debt burdens. David Tait, the CEO of the London-based World Gold Council (WGC), recently told Daily Maverick that he saw this as a key driver of gold’s current performance.

Read more in Daily Maverick: Gold a glittering exception among South Africa’s basket of commodities 

Central bank purchases of gold in the first nine months of 2023 reached 800 tonnes, a year-to-date record for that timeframe, according to the WGC’s latest quarterly report on demand trends.   

World gold production also hit an all-time third-quarter (Q3) record of 971 tonnes this year, signalling that there is a global scramble to get the precious metal to the market while prices are red hot.  

The share prices of gold producers are reflecting the commodity’s performance. Profits from South African gold production have been further lifted by the rand’s decline in value this year. This double whammy is flowing to the bottom line on the Witwatersrand. 

Among JSE-listed producers, the share price of Harmony Gold — which gets most of its output from South Africa — is up by more than 90% in the year to date. Gold Fields, which gets most of its gold production outside of South Africa, is about 55% higher.  

Can gold hold its gains and reach new heights? If US interest rates have peaked, geopolitical tensions remain on the boil, and a new debt crisis emerges, gold will still have plenty of wind in its sails. There are no signs of softening demand among central banks and the global economic outlook remains foggy.  

The bottom line is that all of the signs for gold at the moment are bullish with no bears on the immediate horizon. DM