By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Gold prices have reclaimed the $2000 mark after investors fled to safe havens in the face of growing concern that Israel will carry out a full-scale physical invasion of Gaza to drive out Hamas militants from the Palestinian enclave. Despite the continuous intervention by the US and other world powers,
Israel and Hamas were no closer to a resolution.
Israel claims to be preparing a ground invasion, but the United States and the Arab nations have encouraged it to postpone the operation because it could spark a wider confrontation and result in many civilian casualties along the heavily populated coastal strip. Prime Minister Benjamin Netanyahu said that Israeli forces were still getting ready as his forces launched their largest ground operation against Hamas in Gaza overnight.
The ongoing conflict is having a major influence on gold prices, which could increase once more if it turns into a larger regional conflict. Moreover, since the yellow metal demonstrated its worth as a safe-haven asset, elevated US yields did not influence limiting recent rises. Higher bond yields haven’t affected gold as investors’ attention has shifted to potential concerns about an approaching US fiscal crisis.
Additionally, the ECB ended a run of ten previous rate hikes this week, which was widely anticipated in the financial markets. The ECB concluded that it had done enough to address the rising cost of living for the time being, and it left its key policy rates unchanged for the first time in more than a year. Concerns regarding the effects of rate increases on European economies are growing, even if inflation is still above the bank’s 2% target. A decline in Germany, where a manufacturing slump caused business activity to decrease for a fourth consecutive month in October, is one-factor driving warning of a potential Eurozone recession, which in turn supports gold prices.
Major central banks will be releasing a plethora of monetary policy announcements next week, including the BOJ policy on Monday, the US Consumer Confidence report on Tuesday,
the FOMC policy on Wednesday, the BOE policy on Thursday, and the Nonfarm Payroll data on Friday. The markets perceive a virtually 100% possibility that the Federal Reserve will maintain interest rates between 5.25 – 5.50%, according to the CME FedWatch Tool. The Federal Reserve is anticipated to continue its tight monetary policies for the foreseeable future at the same time.
Gold prices have regained momentum and are heading towards all-time high levels in India.
Prices have closed above $2000 (~ Rs 61000) this week, the next resistance is $2045 (~ Rs 62300) and $2080 (~ Rs 63500), with recent downside support of $1965 (~ Rs 60000). Every dip in prices should be used as a buying opportunity. Supporting factors are US Fiscal Policy, Geopolitical Tensions in the Middle East, Eurozone Recession fears and FOMO (Fear Of Missing Out) demand by Institutional and Retail Investors.
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