GOLD Analysis
Afternoon: Gold Trades Lower at $2,630 Amid Holiday Lull and Mixed Economic Signals
Highlights:
- Softer US inflation data fuels hopes of more Fed rate cuts, benefiting gold.
- Geopolitical risks sustain gold's safe-haven appeal amid global tensions.
- Central bank purchases and easing policies drive gold's best annual performance since 2010.
Overview:
Gold declined to $2,630 in subdued holiday trading, as investors assessed key economic and geopolitical factors shaping its outlook. Market focus remained on the incoming Trump administration's policies and the Federal Reserve's monetary stance. Softer-than-expected US PCE inflation data raised the possibility of additional rate cuts next year, despite the Fed’s earlier projections of limited reductions. Lower interest rates enhance the appeal of non-yielding assets like gold, which thrives in a low-rate environment.
Geopolitical risks added a layer of complexity, with ongoing tensions in the Russia-Ukraine conflict and the Middle East bolstering gold’s safe-haven demand. Central bank purchases and monetary easing by major economies have been key drivers of gold's robust 27% annual gain, its best performance since 2010.
Support for gold prices is seen at $2,616, with resistance near $2,648. On the MCX, support lies at ₹76,400, with resistance at ₹77,200.
Trading Strategy:
Investors are advised to consider buying on dips around $2,625, targeting $2,640, with a stop loss set below $2,616.
Support and Resistance Levels:
