By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
The main theme of the first week of 2025 was the strength of the US Dollar. The US Dollar Index, which measures the US dollar’s performance versus six major currencies, reached a new multi-year high of 109.56 on Thursday before dropping below 109 by the end of the week.
The US dollar has gained strength since mid-August, when it held important support at 100 points. The market’s bullish sentiment has only risen after the November election in the United States. President-elect Donald Trump’s ‘America-First’ policies are fueling anticipation of a rebound in American manufacturing, which will further promote economic development.
What led to this was the election of Donald Trump as US president, which raised concerns that his tariff and tax cut policies would refuel inflation. The better-than-expected economic data, and the stickiness in inflation even before Trump’s policies were enacted, have also corroborated the idea that the Fed should not be in a rush to lower interest rates further.
The strength of the Greenback may limit the upside potential of dollar-denominated gold, as a higher USD makes gold more expensive for buyers using other currencies.
Other developments include geopolitical events that have an impact on the outlook of the precious metals markets. Russia’s drone activities in Ukraine, combined with Israel’s airstrikes in Gaza, have boosted demand for the safe-haven asset.
This week’s focus will be on the US Nonfarm Payrolls jobs data, which will begin the monthly cycle of US labour stats for 2025. January has consistently seen the highest price gains in the last 20 years as investors and asset allocators build new long positions, accompanied, of course, by strong jewellery demand over the holiday season.
As suggested last week, Gold has been taking support at the uptrend line for the past two months, and the prices have indeed taken support at Rs 76000 and are on the course of touching Rs 78500 soon.
Domestic Gold Daily Chart
Similarly, Silver has been consolidating in the descending triangle with support at Rs 87000 and resistance at Rs 94000. Buy on dips in the range of Rs 87000-88000 and selling on rallies around Rs 94000 level should be the strategy used.
Domestic Silver Daily Chart
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