The markets hit a fresh five-month high on Monday morning, with the ASX 200 spiking last Thursday after better-than-expected US inflation data. This follows three straight weeks of gains in a resurgence of sorts for the embattled Aussie index. On Tuesday, the ASX 200 finished marginally lower.

Last week I mentioned that stocks involving the lithium sector were up. After markets closed on Tuesday, all the major lithium companies were down, including Core Lithium Ltd (ASX: CXO) (-15.8%) and Allkem Ltd (ASX: AKE) (-12.4%). However, these stocks are still well in the green for the week.

Gold is trading up 6.6% for the week in USD terms, in conjunction with the US dollar finally pulling back. It is still down 14.2% from its March 2022 high, but recent inflation figures out of the US that sparked a market rally could provide an opportunity for the Fed to slow their pace of tightening – giving further tailwinds to the gold price.

After a significant rally following positive data out of the US and profit-taking from major mining and energy stocks, the markets are now moving cautiously ahead of Australian jobs and wages data.

With the US dollar index (DXY) falling nearly 4% off previous highs last Thursday, the gold market has made some significant moves in the past two weeks. Gold has risen to a three-month high and is within striking distance of $1,800 an ounce.

The market sentiment appears more bullish now, after a strong US dollar and rising interest rates had previously dragged the price of gold down to pre-pandemic levels. While analysts suggest this could be the result of short covering, investors are now cautiously optimistic that gold could still be a good hedge against inflation.

It was a week of major data and events, with softer-than-expected US inflation data and US midterms that look set to end in a divided parliament, with the Democrats winning control of the Senate, while the Republicans are one seat away from taking the House of Representatives.

Looking at the week ahead, there is some key data this week that could go some way into whether this positive market trend will continue.

Yesterday we received a wages growth update for the September quarter. Today, there is an update on jobs growth for October. If the data comes out with strong numbers, this could signal to the markets the possibility of more interest rate hikes; the opposite if we see softer data.

All in all, the market is getting closer to those all-time highs (6.5% away) after 5-6 straight weeks of rallying, showing positive sentiment and an overall optimistic outlook.

Today I’ll be hosting our Investing in Gold Summit, featuring a panel of leading resources fund managers and analysts: John Forwood, CIO of Lowell Resources Funds Management, Roscoe Widdup, Portfolio Manager at Triple Eight Capital and Zach Riaz, Director of Banyantree Investment Group.

Click here to join us today at 1pm (AEDT), where leading fund managers and analysts provide insights on what drives the price of gold, their expectations for 2023 and how it can translate into investment opportunities.

Past performance is not a reliable indicator of future performance.