6 days ago
Gold Rises 12% This Month as Investors Weigh Buying Time
Gold has become more expensive this month, rising by more than 12%.
Investors often buy gold when they are worried about the economy, currencies or conflicts.
Recent support came from concerns about US government debt and the value of the dollar.
Tensions involving Iran and other geopolitical developments have also increased demand for gold.
However, gold does not pay interest, so higher interest rates can make it less attractive.
Experts think gold may continue rising over time, but prices could move up and down sharply.
They do not generally expect gold to reach $5,500 very soon.
Whether to buy now depends on how much volatility and risk an investor can accept.
Gold prices have risen more than 12% this month, briefly moving above $4,600 an ounce.
MCX October gold futures gained 0.28% to ₹1,60,108 per 10 grams.
The rally has been supported by dollar-debasement concerns, a softer dollar, safe-haven demand and ETF inflows.
Analysts say geopolitical tensions, Federal Reserve signals and US economic data could keep prices volatile.
Experts broadly expect further upside but say an immediate move toward $5,500 is unlikely.
- Who
- Gold investors, Federal Reserve policymakers and commodity analysts including Kaynat Chainwala, Hareesh V and Aamir Makda.
- What
- Gold prices rose more than 12% this month, prompting debate over whether it is the right time to buy.
- Where
- International gold markets and India's Multi Commodity Exchange, or MCX.
- When
- The latest reported move occurred on Thursday, with further interest-rate signals expected around the annual Jackson Hole gathering.
- Why
- Prices were supported by safe-haven demand, dollar-debasement concerns, a softer dollar, geopolitical tensions, ETF inflows and physical demand from China.
Bullish outlook
Cautious outlook
Further price gains
Bullish outlook
Supporters of the bullish view point to safe-haven demand, geopolitical tensions, dollar-debasement concerns, ETF inflows, Chinese physical demand and budget-deficit worries as reasons gold could rise further.
Cautious outlook
Cautious analysts say a sustained move toward $5,500 in the immediate term is unlikely and would require clearer Federal Reserve easing, a sharper dollar decline or renewed concerns about US fiscal credibility and bond-market stability.
Timing of a purchase
Bullish outlook
The constructive macroeconomic backdrop and gold's position above its 20- and 50-week exponential moving averages support the case for continued medium-term strength.
Cautious outlook
Buying could involve substantial short-term volatility because of US economic data, Federal Reserve signals, dollar fluctuations and the effect of interest rates on gold, which does not generate income.
Technical target
Bullish outlook
Aamir Makda identified $4,895 as key resistance and said a breakout could take Comex spot gold toward $5,000-$5,500 in coming weeks.
Cautious outlook
Other analysts do not treat that move as the immediate base case, emphasizing that long-dated Treasury yields remain a headwind and that gold's path is unlikely to be a straight-line rise.
Key facts
- Monthly increase
- Gold prices have risen more than 12% so far this month.
- International price
- Gold climbed back above $4,600 an ounce on Thursday.
- Domestic price
- MCX October gold futures rose 0.28% to ₹1,60,108 per 10 grams.
- September rate outlook
- The CME FedWatch Tool showed a 36.1% probability of a US rate hike in September.
- December rate outlook
- The probability of a US rate hike was 72.1% by December, according to the CME FedWatch Tool.
- Current import duty
- India's gold import duty was described as 15%, with possible revision under consideration.
- Analyst view
- The analysts cited broadly positive medium-term prospects but said an immediate move toward $5,500 was unlikely.
Quotes
Kaynat Chainwala
AVP of Commodity Research at Kotak Securities
“Looking at Technical levels, Key resistance would be at $4895 and breakout of this level will lead Comex Gold spot towards $5000 - $5500 in upcoming weeks”
livemint.com
“However, a sustained move towards $5,500/oz in the immediate term is not yet our base case.”
livemint.com
Sources
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