Understanding Surge in Gold Prices: Key Factors and Essential Insights for Buyers
Despite people opting for gold during uncertain times, a strong dollar can limit how high gold prices go.
Gold is considered a safe investment option during tough conditions.
Gold prices climbed on Thursday, with prices in India reaching around ₹80,000 per 10 grams.
Globally, spot gold increased by 0.3% to $2,725.51 per ounce, after a recent peak of $2,758.37 per ounce.
Important Factors Driving Gold Prices
Safe-Haven Demand
Gold is considered a safe investment option during tough conditions, particularly amid ongoing geopolitical tensions that are underway in the Middle East and uncertainties over the upcoming US presidential election.
Also, ongoing chaos between two countries - Hezbollah and Israel has made investors cautious about investments.
It is also time for elections in the US as they are scheduled to take place on November 5 US.
Current Vice President Kamala Harris and Donald Trump are competing for the US President's post.
All these happenings are paving the way for gold and forcing investors to consider gold as their investment option.
Geopolitical tensions, a potential easing cycle from the US Federal Reserve, and increased central bank purchases are likely to push gold prices higher. It could reach $2,800 per ounce by the end of the year and reports suggest that price might peak over $3,000 per ounce in 2025.
When the US dollar picks up, it makes gold more expensive for buyers who make purchases using other currencies, eventually reducing demand for gold.
Despite people opting for gold during uncertain times, a strong dollar can limit how high gold prices go.
Expectations that the Federal Reserve will lower interest rates are increasing interest in gold. When rates drop, holding gold becomes more attractive because investors don’t lose out on potential returns from interest-bearing assets.
Despite the pressure from a strong dollar, traders are still positive about gold prices, with many aiming for $2,800 per ounce soon, reflecting confidence in gold’s value amid current economic conditions.
What Should Buyers Do?
Watch Key Economic Indicators
Buyers should keep an eye on the US Initial Jobless Claims report and other economic data. If jobless claims remain low, indicating a stronger US economy, it could lead to profit-taking in gold, possibly pushing domestic prices down to support levels of ₹77,000 to ₹77,500 per 10 grams.
Upside Potential
Even with possible short-term corrections, as long as gold stays above these support levels, the overall trend remains positive. A resistance level is set at ₹79,000 per ounce in India; if this level is broken, it could signal further price increases.
Is Gold a Safe Bet for Investors?
With the current global political situation and economic uncertainty, gold is still seen as a safe investment. For those investing for the long term, the current prices could lead to growth, especially with forecasts suggesting further increases in 2025. However, short-term investors should be careful and watch important economic data that could cause market changes.
