Despite the strength of the US dollar, gold and silver prices have been surging, reaching record highs in recent trading sessions. The rally in precious metal prices comes amid speculation about a potential rate cut by the US Federal Reserve and other geopolitical factors. Let’s delve into the five key reasons driving the remarkable ascent of gold and silver prices despite the robust performance of the US dollar.
Reason 1: Expectations of US Fed Rate Cut
Market experts attribute the rally in gold and silver prices to growing expectations of an imminent end to the high-interest rate environment. The possibility of a rate cut by the US Federal Reserve has fueled optimism in the precious metals market, prompting investors to hedge against potential inflationary pressures.
Reason 2: Rising Geo-Political Risks
Geopolitical tensions and uncertainties in various regions across the globe have also contributed to the surge in gold and silver prices. Heightened geopolitical risks have bolstered the appeal of precious metals as safe-haven assets, driving demand and pushing prices to new heights.
Reason 3: Aggressive Buying by China
China’s aggressive purchasing of gold in recent weeks has further fueled the upward momentum in precious metal prices. The significant buying activity from one of the world’s largest economies has underscored the bullish sentiment surrounding gold and silver, driving prices higher in both domestic and international markets.
Reason 4: Uncertainties Ahead of Major Elections
With several major economies gearing up for general elections, investors are seeking refuge in gold and silver amid heightened uncertainties. The anticipation of potential policy shifts and geopolitical dynamics following the elections has driven demand for precious metals, contributing to their upward trajectory.
Reason 5: Depreciating Indian National Rupee (INR)
The depreciation of the Indian National Rupee (INR) against major currencies has provided additional support to gold and silver prices in domestic markets. As the INR weakens, the cost of importing gold and silver rises, leading to higher prices for consumers in India and further boosting demand for precious metals.
Market Insights and Expert Commentary
Sugandha Sachdeva, Founder of SS WealthStreet: Sugandha Sachdeva highlights the remarkable rally in gold prices, attributing it to factors such as expectations of monetary policy easing by the US Federal Reserve and geopolitical tensions. She emphasizes the role of sustained central bank buying and uncertainties surrounding upcoming elections in major economies in driving the upward trend in gold and silver prices.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities: Anuj Gupta points to the release of better-than-expected US non-farm payroll data as the immediate trigger for the surge in gold and silver prices. He highlights the positive labor market indicators, which have contributed to market speculation about a potential rate cut by the US Federal Reserve.
Outlook and Predictions
Sugandha Sachdeva, Founder of SS WealthStreet: Sachdeva anticipates further upside in gold prices, with potential targets of ₹72,000 per 10 gm or $2380 per ounce. She advises investors to closely monitor economic indicators and geopolitical developments for potential impacts on gold prices while remaining vigilant for buying opportunities amid the bullish trend.
Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher: Koothupalakkal forecasts a bullish trajectory for gold prices, suggesting that any dips should be viewed as buying opportunities for medium to long-term investors. He predicts a short to medium-term target of ₹74,200 per 10 gm for gold prices, signaling optimism in the precious metals market.
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