By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Gold saw a modest increase this week as worries about an economic downturn were eased by the People’s Bank of China’s decision to lower the one-year Loan Prime Rate by 25 basis points, from 3.35% to 3.10%. The US and ECB’s monetary easing policies have also contributed to the increase in the price of precious metals.
According to the CME Fed Watch Tool, markets are virtually completely pricing in a 25-bps rate decrease at the forthcoming meeting, with a 70% likelihood that the Fed will lower the policy rate by a total of 50 basis points by the end of the year. Furthermore, political uncertainty has also risen, with only a few days remaining in the US election, there is a neck-and-neck race between US presidential candidates Donald Trump and Kamala Harris, who have opposing views on key economic issues such as tax breaks, tariffs, and international trade relations, particularly with China.
Furthermore, rising global tensions enabled the precious metal to attract safe-haven demand. Israel launched airstrikes on Iran early Saturday, targeting military sites in retaliation for the Islamic Republic’s October 1, 2024 attack on Israel, which involved around 200 ballistic missiles. This was Iran’s second direct attack in six months.
The Israel-Hamas conflict, which began in October 2023, has resulted in a more than 35% spike in gold and silver prices owing to safe-haven demand. Additionally, investment demand for precious metals remains high, driven by central banks and physical buying during India’s festival season.
Gold Weekly Chart
Gold has been trading in the up-trend channel for the last year since $1850 (~Rs 56000). Immediate resistance in this channel is around $2800 (~Rs 80000) and support is around $2550 (~Rs 74000). As long as, gold prices are in this trend channel, bullish view is intact. Due to geopolitical and political uncertainty, there is higher likelihood that gold prices will touch $2800 (~Rs 80,000) in next week.
Silver Weekly Chart
As suggested in the previous week’s report, Silver is likely to touch $35 (~Rs 100,000), that target was achieved this week and we saw some profit booking at those resistance levels.
Moreover, Silver has also given a neckline breakout at $33 (~Rs 95500) on Inverse Head and Shoulder pattern formation from $27 to $33 on weekly charts. If prices sustain above $33 in the next week, we could see a run-up in this rally towards $38-39 (~Rs 115,000) in the next few months.
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