Gold prices have rebounded significantly after a period of sharp corrections, spurred by Donald Trump’s election victory. With a rise of Rs 1,639 per 10 grams in the past two trading sessions, the precious metal is regaining traction as investors monitor global market volatility.
The rally is attributed to a pause in the dollar index’s ascent, growing geopolitical risks, and increased demand from buyers preparing for wedding season.
Recent Market Trends
On the MCX, gold closed at Rs 75,585 per 10 grams in the latest session. Globally, COMEX gold rose 0.3%, trading at $2,638.4 per ounce, while spot gold inched up 0.17%, settling near $2,640 per ounce.
Although gold prices have rebounded, they remain over 5.5% below their October-end peak of $2,790.4 per ounce. Domestic prices, previously near Rs 81,000, now hover around Rs 76,000, creating a potential entry point for buyers.
Factors Influencing Gold Prices
Gold’s resurgence reflects a confluence of global and domestic dynamics:
- Dollar Index Pause
A halt in the dollar index’s rally has bolstered gold’s appeal. A weaker dollar generally enhances the attractiveness of gold, particularly for international buyers. - Geopolitical Tensions
Escalations, including Russia’s amendments to its nuclear policies and heightened conflict in Eastern Europe, have fueled demand for gold as a safe-haven asset. - Indian Rupee Strength
The strengthening Indian rupee against the U.S. dollar has also made gold relatively more affordable for domestic buyers.
Central Banks and Institutional Activity
Central banks worldwide continue to stockpile gold. Recent surveys reveal that 81% of central banks plan to increase their gold reserves in 2024, with emerging markets expected to lead these purchases.
Analysts project total purchases to range between 800 and 900 tonnes, reflecting sustained institutional confidence in the metal’s long-term value.
Gold ETFs Show Mixed Trends
While physical gold demand has risen, exchange-traded funds (ETFs) are displaying mixed performance.
Bloomberg data highlights a net decline of 601,000 ounces in gold ETFs between November 10 and 17, including a significant drop of 265,000 ounces in a single day. Conversely, silver ETFs have grown by 5% this year despite recent fluctuations.
Russian-Ukrainian Conflict and Safe-Haven Demand
The ongoing conflict in Eastern Europe remains a critical factor in gold’s market dynamics. Investors have increasingly sought gold as a hedge against geopolitical instability, with heightened risks influencing safe-haven flows.
Federal Reserve Policy and Investor Sentiment
Speculation surrounding the Federal Reserve’s monetary policy continues to impact gold prices. While a December rate cut was initially anticipated, stronger-than-expected U.S. economic data has tempered these expectations.
Inflation trends and employment reports will be pivotal in shaping the Fed’s next moves, which, in turn, will influence gold’s trajectory.
Technical Analysis
Note – While technical analysis provides valuable insights based on historical price data and key indicators, it is important to remember that it is not foolproof. Market conditions can change rapidly due to unforeseen events, economic shifts, or geopolitical factors. Technical patterns and indicators should be used as part of a broader strategy, alongside fundamental analysis and risk management practices. Always exercise caution when making trading decisions, and consider external factors that could impact market trends.
Gold’s recovery from eight-week lows of $2,530 has analysts optimistic about further gains. A sustained break above $2,642 could pave the way for a move toward September highs of $2,686. The medium-term outlook remains cautious, with prices still well below record levels.
As of 1:57 PM GMT, XAU/USD is trading at $2,635.46, reflecting cautious sentiment amid geopolitical tensions and macroeconomic uncertainties.
Key Moving Averages (Daily Candle):
- 50-Day SMA: $2,658.54
- 20-Day SMA: $2,679.65
- 10-Day SMA: $2,618.72
- 5-Day SMA: $2,601.50
Disclaimer – This article is intended for informational purposes only and should not be considered as financial, investment, or trading advice. Readers are encouraged to conduct their own research or consult with a qualified financial advisor before making any investment decisions. MarketScope Daily strives for accuracy in its reporting but does not guarantee the completeness or reliability of the information provided. Investment in commodities, including gold, carries risks, and past performance is not indicative of future results.
