Gold has once again proven its status as a safe-haven asset, reaching a fresh all-time high of $2,531. As global uncertainties increase, investors are flocking to gold, driving up its price. Currently, the precious metal is trading around $2,513, but the market remains focused on the upcoming Federal Open Market Committee (FOMC) meeting minutes, which could provide further direction for gold’s price movement.
Indian Gold Demand Jumps Amid Tax Cuts
In India, gold demand has surged following the government's decision to cut the import tax from 15% to 6%. This tax reduction has made gold more affordable for consumers, thereby boosting demand in one of the world's largest gold markets.
Weak US Dollar and Easing Treasury Yields Support Gold
The US dollar has been on a downward trend, which is positive for gold prices. A weaker dollar makes gold more attractive to investors holding other currencies. Additionally, the easing of US Treasury yields has provided further support for gold, making it a more appealing investment compared to fixed-income securities.
According to the CME FedWatch Tool, the probability of a 25 basis points rate cut in September has risen to 67.5%, up from 47% just a week ago. This growing expectation of a rate cut has added fuel to gold’s upward trajectory, as lower interest rates typically weaken the dollar and increase the appeal of non-yielding assets like gold.
US Dollar Index Outlook
The US dollar index remains bearish, with minor support levels around 101.80 and 100.60. In the near term, resistance levels are noted at 102.50 and 103. A weaker dollar typically boosts gold prices, as it makes the metal cheaper for investors using other currencies.
Key Factors Influencing Gold Prices
Several factors are currently driving gold’s price action:
Global Stock Market: The global stock market remains bullish, which is generally negative for gold. However, any signs of market instability could lead to increased demand for gold as a safe-haven asset.
US Dollar Index: The bearish outlook for the US dollar is a positive factor for gold, as a weaker dollar boosts the metal’s appeal.
US 10-Year Bond Yield: The bearish trend in the US 10-year bond yield is also supportive of higher gold prices. As bond yields decline, the opportunity cost of holding gold decreases, making it a more attractive investment.
Technical Analysis
From a technical standpoint, gold has near-term support around $2,470. A break below this level could see the metal drop to $2,450, $2,430, or even $2,400. On the upside, gold faces minor resistance around $2,515. If this resistance is breached, the next target levels could be $2,554.
For traders, it may be a good opportunity to buy on dips around $2,450-$2,455, with a stop-loss (SL) set around $2,430. The target profit (TP) could be aimed at $2,510 and $2,550.
Conclusion
Gold's recent surge to a new all-time high reflects its enduring appeal as a safe-haven asset amid global economic uncertainties. With a weak US dollar, easing Treasury yields, and growing expectations of a Fed rate cut, the outlook for gold remains positive. However, traders should keep an eye on global market dynamics and technical levels to navigate the gold market effectively.
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