Has the Gold Bull Market Ended?

Gold has been on a tear in recent years, with prices surging past $2,400 in April 2024 and continuing to hit fresh highs throughout the year. However, with the recent pullback in gold prices, some investors are wondering if the gold bull market has finally come to an end. In this article, we will explore the factors that have driven the gold market's performance in 2024 and analyze whether the bull market is still intact.

Gold's performance in 2024 has been driven by a multitude of factors, including heightened geopolitical risks, expectations of Fed rate cuts, central bank buying, and a decoupling from U.S. real yields. The structural bull case for gold remains intact, with prices expected to average $2,500/oz in the fourth quarter of 2024. This trajectory is consistent with previous bull market cycles, where gold prices have followed an upward trajectory following the first cut of the last three Fed cutting cycles in 2001, 2007, and 2019.

However, some investors are concerned that the recent pullback in gold prices may signal the end of the bull market. To determine whether the gold bull market has ended, we need to consider the factors that have driven gold's performance and analyze whether they are still in place.

1. Geopolitical Risks: Geopolitical risks have been a significant driver of gold's performance in recent years. However, with the ongoing conflict in Ukraine and tensions in the Middle East, geopolitical risks remain elevated, supporting gold's safe haven status.
2. Central Bank Policies: Central banks around the world have been engaged in quantitative easing (QE) and low-interest rate policies, which have increased demand for gold as a safe-haven asset. While the Federal Reserve has indicated that it may begin to raise interest rates in the coming months, central banks are expected to maintain accommodative monetary policies, which could further boost demand for gold.
3. Inflation Expectations: Inflation expectations have been a key driver of gold's performance in recent years. With inflation remaining elevated, investors are likely to continue buying gold as a hedge against inflation.
4. Decoupling from U.S. Real Yields: Traditionally, gold's price moves in tandem with U.S. real yields. However, in recent years, this relationship has broken down, with gold prices surging despite higher U.S. real yields. This decoupling is partly due to increased geopolitical risks and global economic uncertainty.

Based on these factors, it is unlikely that the gold bull market has ended. Geopolitical risks, central bank policies, inflation expectations, and the decoupling from U.S. real yields are likely to continue supporting gold's price in the near future.

However, it is essential to consider that the sustainability of the gold bull market also depends on factors such as mine supply, jewelry demand, and central bank selling. If these factors change significantly, they could impact gold's price and the overall trajectory of the bull market.

In conclusion, the gold bull market is still intact, driven by factors such as geopolitical risks, central bank policies, inflation expectations, and the decoupling from U.S. real yields. While the recent pullback in gold prices may have some investors concerned, the fundamentals of the gold market remain strong, and the bull market is likely to continue in the coming quarters. However, investors should closely monitor economic and political developments for any changes in the gold market.