Gold – will the price only gain momentum? Gold price potential ranges for current volatility

The gold market often arouses a lot of emotion among investors, and the price of gold seems to be a barometer of the level of fear in the market. The higher the gold price, the greater the potential for uncertainty and fear, and the lower the gold price volatility, the greater the calm appears to be. Gold prices are currently oscillating around USD 2000 per ounce, defending this level which can be treated as potential support. However, in this post we will look at expected volatility rather than technical analysis.

Gold volatility lowest in months

We haven't seen such low volatility on the gold market for a long time. The GVZ volatility index is at 11,75, which means that investors expect the gold price to change by only 12% over the course of a year. This is the lowest value since September 2023. Then the index dropped even to 10,5 points. Moreover, similar low values ​​were observed earlier before the pandemic, in January and February 2020. This may be the reason for the observation of a possibly winding spring in the gold market, as volatility is a sinusoidal phenomenon. High volatility leads to its decline, and low volatility also does not last forever and begins to increase over time, along with subsequent events hitting the market.

What could be the ranges for the gold price in the near future?

Due to the fact that the market values ​​the volatility of gold very low, the chances of reaching levels resulting from such volatility may increase. In this way, less than 12% of annual volatility implies the possibility of gold prices reaching USD 2080, in terms of the upper possible range, or USD 1970 by mid-March 2024. It seems that higher ranges can only be realized when they hit the market. very unexpected information that would definitely increase the expected volatility. Otherwise, gold market investors must be patient or look to lower time frames to potentially capture smaller price movements.