Gold finished the day approximately $18.50 higher, ending near the middle of this week’s trading range. From a technical perspective, gold remains above its 100-day moving average but below its 200-day moving average, leaving the market in an interesting area as we wait to see whether the recent rally can regain momentum. A break of the 200-day moving average, would be very bullish signal to me.

The December Gold EFP settled slightly firmer in the broker market at approximately $57.00. At this level, the implied annualized yield remains at a meaningful premium to both London OTC forward rates and comparable USD SOFR rates.

That premium continues to be worth watching. We saw Gold EFPs move sharply higher during the recent period of concentrated CTA short covering and futures buying. While some of that pressure has eased, the EFP remains elevated relative to OTC and SOFR, suggesting there is still some dislocation between the CME futures and London OTC markets, as well as banks less willing to take on risk.

At the same time, London physical market conditions appear relatively liquid. Elevated OTC London gold and silver forward rates, together with replenished inventory balances in London, suggest there is currently a decent amount of metal and liquidity available.

For me, this remains an important part of the story. We will likely need to see stronger physical demand and renewed ETF inflows to absorb some of that available liquidity and tighten the London market. A sustained tightening in OTC rates, particularly if accompanied by stronger physical demand and ETF accumulation, would provide a more fundamentally bullish signal for precious metals prices.

So where does that leave us?

Gold continues to hold above its 100-day moving average, EFPs remain elevated relative to OTC and SOFR, and the market has shown some resilience despite a stronger U.S. dollar at various points during the week. However, I would like to see stronger physical demand, increased ETF inflows, and eventually a sustained break above the 200-day moving average before becoming more confident that the next leg higher is underway.

And, of course, geopolitics remains the wild card. We are still waiting for a more permanent resolution to the conflict in the Middle East, while one has to wonder whether a truly permanent resolution is even possible. Until there is greater clarity, headline risk can quickly overwhelm fundamentals and technical signals in either direction.

For now, I remain cautiously optimistic, but patient. As I have said repeatedly, geopolitical markets are notoriously headline-driven. Let the market reveal its direction rather than trying to anticipate every move.

This commentary is provided for educational purposes only and should not be considered investment advice.