Gold prices are off to their best start of the year since 2012 and are getting close to a technical bull market

Since 2012, gold prices are off to their greatest start to the year, and the metal is dangerously close to entering a technical bull market.

Overnight, gold prices went above $1,940 an ounce, which is a big deal. For a short time, this made the gold market an official bull market.

Even though gold prices are down a little from their highs from the day before, they are up nearly 20% from their two-year lows in November. The last price for an ounce of gold futures for February was $1,938.70.

Along with being in a bull market, the price of gold has gone up $100 in the first month of 2023. This is the best start to a year since 2012, when it was also a bull market.

Analysts say that gold is getting back on its feet because bond yields are still low and the U.S. dollar is still trading at its lowest level in seven months.

Analysts say that the dollar is still being hurt by changing expectations about interest rates. At 102 points, the U.S. dollar index is still at its lowest point in seven months. The markets are almost certain that the Federal Reserve will raise interest rates by 25 basis points next month.

In a note released Tuesday, Ole Hansen, head of commodity strategy at Saxo Bank, said, "The yellow metal is getting new interest from traders and investors who see a brighter future." He said this is because last year's headwinds, like rate hikes, rising yields, and a stronger dollar, are now tailwinds as rate hikes stop, yields decline, and the dollar weakens because of worries about the economy.

Hansen also said that he thinks prices could go up because gold prices have historically gone up a lot after interest rates have reached their highest point.

"The market thinks that the U.S. rate will go up one or two more times before stopping at or below 5%." "If history is any guide, gold may have a lot more room to rise," he predicted.

Gold is having a hard time breaking through $1,940, but Jeremy Naylor, a market analyst at I.G., said that if prices do break, there isn't much stopping gold from going to its all-time highs.

He said in a report, "We're a long way from there, but some people think that's the price goal to shoot for."

Lukman Otunuga, a senior research analyst at FXTM, said that he is keeping an eye on resistance at $1,950 an ounce, but he also said that the precious metal has a lot of momentum.

"The precious metal has gone up for five weeks in a row, which is a good sign, and it could go even higher if the fundamental drivers don't change." "In the next few days, a weaker dollar and weak economic news from the U.S. could make people want gold even more," he said.

Even though gold prices are technically in a bull market, some analysts say that they are becoming overstretched and that a little bit of consolidation at current levels could be good.

Hansen said that low demand for gold-backed exchange-traded funds is one thing holding back the gold market.

"We haven't seen demand for ETFs pick up yet." "Total holdings are still close to a two-year low, around 94 million ounces, and there was no increase during the 320-dollar rally," he said. "Traders' confidence is usually low at the start of a new trading year because they are afraid of making the wrong move." At the same time, though, the fear of missing out (FOMO) can also lead to a quick buildup of positions that can leave traders vulnerable if the market changes direction.