As per the Prithviraj Kothari, the current upward dynamic is an exceptional development, with gold prices reaching new highs daily. Record levels which recently still seemed unattainable are scaled, one after another
Gold has powered higher this year, climbing 34% year to date and recently refreshing all-time highs of US$2,758. The precious metal is on track to pencil in its largest one-year gain in 14 years.
According to the Bullion King of India, Prithviraj Kothari, Gold prices are ticking upward on Thursday, recovering from a recent bearish chart pattern. Wednesday’s closing price reversal at $2758.53 indicated potential for a downturn, but the failure to break through the $2708.75 low kept the market afloat.
With a year-to-date gain of around 33% and a seven-day streak of higher closes, investors are increasingly wondering whether this upward momentum is sustainable or if a potential correction may be on the horizon.
Ongoing concerns about the U.S. elections, scheduled in 10 days, and broader geopolitical uncertainties have driven investors toward safe-haven assets like gold.
Several factors are contributing to Gold’s appeal as a safe haven asset. Uncertainty surrounding the upcoming U.S. presidential election and its potential impact on U.S. fiscal policy, trade, as well as inflation and growth prospects are probably one of the most important factors.
Additionally, inflationary concerns around the world, ongoing geopolitical tensions, more accommodative monetary policies adopted by central banks worldwide and increasing discussions about de-dollarization are also bolstering Gold’s appeal and driving investors towards Gold. These factors collectively highlight the role of Gold as a valuable asset for diversifying investment portfolios and protecting against economic and political instability, as well as market volatility.
US Presidential Elections- US elections are unquestionably among the most significant events for global financial markets. The occupant of the White House directly influences the direction of the US’s economic, fiscal, and monetary policies, as well as its foreign relations – factors that are key drivers of market sentiment. Amid growing uncertainty surrounding the US election outcome, gold – a widely recognised safe-haven asset – reached record highs of $2,758 per ounce.
amala Harris and Donald Trump, with current polls unable to point to a clear-cut winner. In the midst of ongoing campaign efforts, Gold has remained a clear outperformer, garnering global attention from both investors and market commentators.
US Treasury Yields- The intraday move up pushes the gold price to the $2,736-$2,737 area during the early European session, though expectations of a less aggressive policy easing by the Federal Reserve (Fed) keep a lid on any further gains. Furthermore, concerns about bigger fiscal deficits after the November 5 US Presidential election should limit the downside for the US bond yields. This, in turn, warrants some caution before placing fresh bullish bets around the XAU/USD and positioning for the resumption of the recent well-established uptrend.
US Data – Gold prices set fresh session highs following the release of better-than-expected labour market data after the number of Americans filing new claims for unemployment benefits last week was lower than forecasted while continuing claims rose.
Initial claims for state unemployment benefits fell to a seasonally adjusted 227,000 for the week ending October 19, the Labor Department announced on Thursday. The number was lower than expectations, as consensus estimates forecasted a reading of 242,000 claims. The previous week’s figure was 241,000.
The gold market shot up to session highs following the release of the labour market data,
Geopolitical uncertainty – The surge in gold prices is supported by escalating tensions in the Middle East and expectations of further policy easing from the US Federal Reserve, with investors currently pricing in 44 basis points of rate cuts by year-end. Lately it looks like the entire world is against the world. On one side we have Russia Ukraine. On the other side Israel- Palestine. While that was not enough, terror attack on Turkey has out it against Syria. While North Korea and South Korea are witnessing tensions near the border, we have China that is preparing for a similar situation against Taiwan.
The broader geopolitical and economic landscape supports a bullish outlook for gold prices in the short term.
Fundamentally, the outlook looks promising for gold in the short to medium term. The variables at play are likely to remain supportive in the absence of any drastic changes to the outlook. Geopolitical tensions in the Middle East are unlikely to de-escalate anytime soon; if anything, they are likely to worsen, which is supportive for gold as a safe-haven asset. Meanwhile, while investors may be less concerned now than they were a few weeks ago due to recent positive data from the US, uncertainty about the US economic outlook persists, which also supports gold prices. Additionally, lower rates from the Federal Reserve would lead to lower yields on US bonds, another positive driver for gold prices in the coming months.
