By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

After posting its largest one-week gain since March, Gold has continued to rise for a second consecutive week and reached its highest level in three months above $2000, fuelled by safe- haven demand. As suggested last week, Gold and Silver’s prices are expected to continue the bull run, the same thing happened. Rs 60000 target for Gold and Rs 73500 target for Silver was achieved.

The Israel-Palestine crisis has now entered its 14th day, and Israel’s defence chief, Yoav Gallant, is preparing his troops to enter Gaza to dismantle the Hamas military. Reports of attacks on US sites in Iraq and Syria overnight raised fears that the US could be drawn further into the fight if it strikes back at those who attack Israel, or, more importantly, those who attack its assets.

Meanwhile, Jerome Powell, as expected, supported a possible rate pause while speaking on monetary policy prospects at the New York Economic Club. He acknowledged that rising US Treasury yields have tightened overall financial conditions significantly. 10 US Treasury yields have approached 5% in the backdrop of unsustainable US budget deficits and rising interest rates.

Powell stated that further policy tightening would be primarily based on economic signs, the developing outlook, and geopolitical tensions. Following Powell’s remarks, trader bets on interest rates being unchanged at the November meeting increased dramatically, indicating a bullish outcome for gold. According to the CME Fedwatch tool, traders believe the Fed will maintain interest rates constant at 5.25-5.50%. The chances of another interest rate hike in any of the two remaining monetary policy meetings in 2023 have reduced to 20%.

The primary driver of Gold’s movement next week is going to be geopolitics. According to reports, Israel’s defence minister has ordered troops to prepare to view Gaza from the inside. A ground invasion will almost certainly result in another round of flight to safety and support for Gold. A rapid de-escalation of tension in the Middle East appears difficult, especially with Hezbollah becoming increasingly involved in the fight.
Gold has touched the important resistance zone of $2000-$2010 and prices are trading in very overbought territory. The rally seems overstretched, so those holding long positions are advisable to book profits because we might see some consolidation to profit-booking now before the rally towards a new record high.

 

Silver prices have also run up more than 10% in the last 15 days to trade around $24, rally seems to be overstretched and overbought. We might see some profitbooking and correction ahead, before the rally up to $25.

 

 

 

 

 

 

 

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