• 10-year US Treasury yields have decreased 3.5% during the past four days, coming back to 4.00% level, amid heightened rate cut expectations. US macro data revealed indications of declining inflation and increased the Federal Reserve’s leeway to further lower interest rates. Consequently, this situation helps the precious metals to trade higher and push the US dollar to a one-week low.
  • The likelihood that the Fed would lower interest rates by 25 basis points to 3.50%–3.75% at the December meeting has risen to 85.3% from 50.1% a week ago, according to the CME FedWatch tool.
  • Furthermore, a persistent increase in the price of the precious metal is limited by expectations of a peace agreement between Russia and Ukraine. However, given that investors are now looking to more US data for some encouragement, the fundamental background indicates that the path of least resistance for gold is to the upward.

Technical Triggers    

  • Gold has been trading in the range of $4000 (~Rs 121,000) and $4200 (~Rs 127,000). Buy on dips around support and sell on rallies around resistance.
  • Silver has been trading in the range of $49 (~Rs 150,000) to $53 (~Rs 160,000). Buy on dips around support and sell on rallies around resistance.

Dr.Renisha Chainani, Head- Research, Augmont