By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Gold accomplished a new all-time high this week of $2700 (Rs 76000), capping its third straight week of gains. The continuous geopolitical concerns, primarily from the Middle East, and the ongoing Russia-Ukraine conflict further supported the precious metal rally. The first was the consistent expectation that the Federal Reserve would reduce interest rates further in the next few meetings and well into 2025.
The persistent geopolitical tension surrounding the Israel-Hamas conflict and the Russia-Ukraine conflict, which is expected to enter its third year in February, is a major factor driving the precious metal’s upward movement. The flight-to-safety principle always comes into play when there’s news regarding any of these problems getting worse, which regrettably don’t seem to be getting better anytime soon.
According to data analysis on speculative market positioning, during the most recent reporting week, speculative net long holdings in gold reached their highest point since February 2020. Since July, the dollar has been on a strong downward trend, and there has been growing conjecture of more monetary policy easing by the Fed. Expectations for a lasting rebound of the US dollar appear to be fading every day, at least in the immediate future, now that the central bank has begun its cycle of rate cuts and inflation is kind of solidly sailing towards the 2% objective.
Gold Weekly Chart
As previously said, a short-term correction is possible given that Gold is now in overbought circumstances, as shown by the daily RSI of about 75. The weekly low of $2625 (about Rs. 74000) serves as a first level of support in this scenario, followed by the September low of $2570 (about Rs. 72800).
Following gold’s recent climb, silver has surged as well. Its highest pricing since December 2012 was $33 (Rs 96400). Subsequently, the ratio of gold to silver dropped to 82, the lowest since mid-July. The massive stimulus plans in China, which were unveiled this week and precipitated a strong increase in base metal prices, are probably what helped silver even more.
Silver Weekly Chart
Silver prices have reversed to $32 (~Rs 91400) after touching double top resistance of $33 (~Rs 94000). Prices need to cross this resistance to move higher or prices sustain below $31.75 (~Rs 91000), we can see a sharp reversal up to $30 (~Rs 88000).
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