[Click eStock] "Gold Price Short-Term Correction... Opportunity to Utilize Low-Price Buying"

The expected magnitude of the U.S. Federal Reserve's (Fed) interest rate cuts next year has narrowed to 50bp (1bp = 0.01 percentage points), increasing short-term gold price volatility. Amid this, securities industry analysts have suggested that this short-term adjustment can be used as a 'buy-the-dip' opportunity.

On this day, Hwang Byung-jin, head of NH Investment & Securities FICC (Fixed Income, Currency, and Commodities) Research, stated, "We have adjusted the gold price range forecast for next year from $2,650?3,000 per ounce to $2,600?3,000 per ounce, while maintaining our investment opinion of 'overweight'."

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He explained, "Since the Federal Open Market Committee (FOMC) meeting last September, the Fed's monetary policy has shifted to 'easing.' As long as it does not return to 'tightening,' the bullish cycle for gold prices remains valid. We recommend using the short-term adjustment as a buying opportunity."

Last week, the commodity market recorded a return of -1.24%, with price pressures across the board in energy, industrial metals, precious metals, and agricultural products. On the other hand, the U.S. November PCE (Personal Consumption Expenditures) price index fell short of expectations, supporting the Fed's easing stance on monetary policy next year.

Hwang noted, "Gold prices rose to as high as $2,800 per ounce at one point this year but halted their upward trend after the U.S. presidential election and have recently increased volatility within a range of $2,500?2,800 over the past month."

He added, "The return of President-elect Donald Trump to the White House and the Republican Party's control of both the U.S. House and Senate have increased the possibility of inflation reigniting next year, leading to a reduction in the expected magnitude of the Fed's rate cuts. The recent upward trends in nominal interest rates and the dollar index, which have pressured gold prices, already reflect the Fed's narrowed easing outlook of up to 50bp for next year."

Furthermore, Hwang said, "Real interest rates, which are expected to stabilize downward to about 1.0%, currently exceed the 2% level in both the short and long term. This highlights the investment appeal of long-term safe-haven and inflation-hedge assets. Additionally, the downward stabilization of real interest rates is accompanied by a decline in the gold-silver price ratio. Until events that cause a sharp rise in real interest rates, such as tightening or expanding deflation fears, occur, we can also expect attempts at silver price increases beyond the bullish trend in gold prices."

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