By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
The present macroeconomic backdrop is creating a “perfect storm” for gold, making it one of the top-performing asset classes in 2024. Gold’s stratospheric journey to gleaming new heights has continued to accelerate this year, cementing its legendary status as the ‘must-have’ asset class in all portfolios.
On Friday, gold prices soared beyond $2500, surpassing the precious metals’ previous all-time high of $2483 set barely a month ago. Gold has been on an unstoppable run since October of last year, leaping from around $1800 to hit back-to-back all-time highs – not once, not twice, but many times this year, and the precious metal is up more than 23% year to date.
Gold completed the week at a new all-time high, despite market expectations of a significant Fed rate drop in September. Gold has gained amid rising geopolitical tensions, as the Israeli Defense Minister stated over the weekend that Iran was still expected to undertake an assault, despite requests from Western nations to refrain from retribution.
The Bureau of Labor Statistics reported on Wednesday that inflation in the US, as measured by the change in the Consumer Price Index, declined to 2.9% on a yearly basis in July from 3% in June. These figures came largely in line with market expectations but the probability of the Fed lowering the policy rate by 50 basis points in September declined below 25% from 52%
There will be no high-tier data releases on the US economic calendar in the first part of the next week. The minutes of the Federal Reserve’s July 30-31 meeting will be published Wednesday. Fed Chairman Jerome Powell admitted a “real discussion” about reducing the policy rate at the July meeting during the news conference. Investors will analyze comments made during the rate-cutting negotiations. If the release reveals that numerous officials lobbied for a surprise rate decrease in July, the USD may come under further selling pressure.
If Iran starts an attack against Israel, as is widely expected, the yellow metal may rise further, hitting the next leg upward of $2525-$2550 in short order. Support is expected at $2466-$2440-$2427, with resistance at $2550 and $2600.
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